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Thursday, 23 November 1905

Senator HIGGS (Queensland) - I move -

1.   That, in the interests of the Commonwealth, the Eastern Extension Telegraph Company should not be granted the right to open offices in Victoria or Queensland.

2.   That any rights temporarily granted to the said company should be withdrawn after three months' notice, cancelling the said rights.

3.   That the Government should do everything in its power to make the State-owned Pacific Cable a financial success, and an up-to-date business enterprise.

I beg to ask the leave of the Senate to amend my motion by adding the following words : -

That the Parliament should provide that the State of South Australiashall not suffer any loss by reason of the Federal Executive giving effect to the foregoing resolution.

Motion amended accordingly.

Senator HIGGS(Queensland). - In submitting this motion, I wish to say that I am not in any way personally interested, except in the same manner as any representative public man or any citizen of the Commonwealth may be said to be concerned in securing reliable cheap submarine telegraphy for the use of the people of the Commonwealth. The subject of this motion, which concerns two rival cables, was brought prominently before the Senate at the end of the last Parliament, towards the conclusion of the year 1903. At that time an agreement with the Eastern Extension Company was being pressed through. Parliament by the Government led by Sir Edmund Barton. It was being pressed through in defiance of protestations on the part of various persons interested in the Pacific Cable. The agreement had passed the House of Representatives, but when it came to the Senate it was held up by those of us who objected to the agreement, and by those1 who thought that before any agreement was arrived at with the Eastern Extension Company the various partners in the ownership of the Pacific Cable should be heard at the Conference which it was proposed to hold. For the information of the honorable senators who were not present during those debates I may have, to traverse some of the grounds which were covered during the discussion in T903. The Eastern Extension Company represents a} .combination of associated companies which 'are engaged in telegraphic transmission between England, Australia, and other countries. The lines of the company comprise (1) the BritishIndian extension from Madras to Singapore with a share capital of ,£450,000 ; (2) the British-Australasian from, Singapore to Australia with a share capital of £ 540,000 ; and {3) the China Submarine from Singapore to Hong Kong and Shanghai, with a share capital of .£525,000. The combined share capital amounts to £1,520,000, which was, on the amalgamation of the company, increased to .£1,997,500, not by the introduction of fresh capital, but by the well-known process of watering. The company paid until lately 9 per cent, on the share capital, but owing to the watering process, it is paying 7 per cent, on the enlarged capital. The Eastern Extension Company is specially interested in blocking, and rendering a financial failure, the State-owned Pacific Cable j because the cables in which the principal shareholders of the Eastern Extension Company are interested, extend almost throughout the world. Sir John Bennison Pender, who is the chairman of directors of the Eastern Extension Company, is also a director of a dozen other different telegraph companies. Sir John Wolff Barry, Sir Alfred Kepple, and the Marquis of Tweeddale, who are directors of the Eastern Extension Company, are also directors of various other telegraph companies. If the Pacific Cable is a financial success, Governments in other parts of. the world, whose people now have to pay exorbitant rates and charges, will be disposed to follow Australia's example, and have constructed State-owned cables, or buy out the existing companies. If, on the other hand, the Pacific Cable is a financial failure, then any proposal that is made to construct a State-owned cable in any other part of the world will be at once scouted. The Pacific Cable_ is a State-owned submarine telegraph line laid down in the Pacific Ocean from Australia to Vancouver in Canada. It was owned, prior to the Federation of Australia, by six Governments, under the British flag. The Imperial Parliament, in July, 1901, passed an Act authorizing the raising of a loan of £2,000,000 towards the cost of constructing the cable, and the six British Governments referred to undertook to repay this money, with interest thereon, maintenance, and other charges, in the following proportions : - United Kingdom, 5-18ths ; Canada, 5-18ths ; New Zealand, 2- 18ths ; Victoria, 2- 18ths ; New South Wales, 2 -I 8ths ; and Queensland, 2-I 8ths. Since the establishment of the Federation of Australia, of course the Commonwealth Government has taken the place of the Governments of Victoria, New South Wales, and Queensland. It will be seen, therefore, that the difference between the two schemes is indicated by the fact that the Pacific Cable is owned by the people of the United Kingdom, Canada, New Zealand, and Australia, whilst the Eastern Extension Company's property ' is owned by shareholders who may be British today, but may be American, German, French, or Russian to-morrow, the shares of the company being transferable. The literature of the fight between these two schemes - that is, between the promoters of the Pacific Cable and the Eastern Extension Company - is of a most romantic and thrilling character, at times raising to the highest pitch of enthusiasm the hopes of those who are friends of the Pacific route, and again depressing them to the lowest depths of angry despair. On the other hand, to the friends of the Eastern Extension Company the literature must be a source of exultant delight, owing to the display of great intelligence and ability on the part of the managers of that company. These gentlemen seem to have been able to move the British Government to a considerable degree. In fact, they have been able to move all parties, from the British Government and1 the Admiralty downwards. They were so successful that they actually delayed the construction of the Pacific Cable for a period of twenty years. Sir Sandford Fleming, who, in 1880, was engineerinchief of the Canadian Pacific Railway, and who is described as a man of means, leisure, and attainments, may be said to be the father of the Pacific Cable.. The author of the All Red Line - a book to which I am indebted for a great deal of information - credits him with " unselfish, unbegrudged, and unpaid-for labours." Sir Sandford Fleming, in 1880, gathered a great deal of information regarding the proposed Pacific Cable, and placed it before the Canadian Parliament. Interest was awakened, but nothing practical was accomplished. But a favorable opportunity presented itself for opening communications with the different Colonial Governments i 111 1886, when an Indian and Colonial Exhibition was held in' London. The Canadian Government took up the matter of the Pacific Cable. A meeting of Agents -General was held, but they declared that they could do nothing until they received instructions from their Governments. The Imperial Government, at this stage, gave no help whatever. Its view was that, although it might be a very good thing to construct a Pacific Cable, the Colonies themselves should undertake the work, and bear the whole of the responsibility. If this were done, the British Government could see no harm in the project ; indeed, it might even be a good thing ; but it would take no part in the work. A year later, in 1887, the Jubilee Imperial Conference was held, and was attended byrepresentatives of Canada, Newfoundland, New! South Wales, Tasmania, Cape of Good Hope, South Australia, New Zealand, Victoria, Queensland, Western Australia, and Japan, and by many gentlemen prominent in British politics. The president of that Conference at once threw cold water on the Pacific Cable scheme, but Sir Sandford Fleming, who had long waiting, secured an opportunity to place arguments in favour of the proposal before the delegates. Sir Sandford Fleming said -

It is only necessary to look at the telegraph map of the world to see how dependent on foreign powers Great Britain is at this moment (1887) for the security of its telegraphic communication with Asia, Australia, and Africa. In fact, it may be said that the telegraphic communication between the Home Government and every important division of the Empire, except Canada, is dependent on the friendship - shall I say the protection - of Turkey? Is not Turkey continually exposed to imminent danger from within? Is she not in danger of falling a prey to covetous neighbours, whose friendship to England may be doubted.

Sir SandfordFleming dealt wilh the opposition shown to the Pacific Cable scheme by the Eastern! Extension Telegraph Company. It may be mentioned that the president had laid before the Conference certain letters and statements from the chairman of that company, which were directed to showing that the proposed Pacific Cable would be a failure. In the first place, the chairman of the Eastern Extension Cable Company pointed out that, on physical grounds, such a cable was impracticable. It would be interesting to ascertain how Sir John Pender was able to play such a prominent part in a public Imperial Conference of that character. The reason, however, may be ascertained from an extract from his letter which was sent to the president of the Conference, and in which he said -

Our system is now very much in touch with Her Majesty's Government, and we have letters from the Foreign Office to the effect that whenever discussion is to take place in regard to submarine telegraphs, we shall have full information on the subject, and representation during such Conference.

That letter may be seen in the proceedings of the Colonial Conference of 1887, on page 124. Mr. Patey, an, assistant secretary of the Post and Telegraph Department of Great Britain, whose duty it was to specially look after telegraphs, and who attended the Conference in an advisory capacity, supported Sir John Pender by saying that if the Pacific Cable were to be constructed, it would be necessary for the work to be carried down in places to a depth of from 11,000 to 12,000 fathoms, or between eleven and twelve miles. The greatest depth at which it was subsequently found necessary to lay the Pacific Cable was from three or four miles. How close the Eastern Extension Telegraph Company was in touch with Her Majesty's Government in Great Britain at that time, I propose to show later on. The friends of the Pacific Cable were unsuccessful at the Conference of 1887. Neither the British Government nor the Admiralty wasfavorable to the proposal; they held that before such a line was constructed there would have to be a survey. The friends of the Pacific Cable had to agree that, perhaps, after all, a survey was necessary, and they asked the British Admiralty to carry out the work. The Admiralty, however, placed all kinds of obstacles in the way, stating that a steamer could not be spared for the work. The Canadian Government offered a vessel, but the offer was not accepted by the Admiralty ; then Sir Sandford Fleming and a friend expressed their willingness to undertake the expense. Again the Admiralty would have nothing to do with the proposal. In March, 1888, the Governor of Victoria cabled to the British Colonial Secretary, stating that at the Postal Conference, held in Sydney, and attended by the representatives of the Colo nies, a resolution had been passed .asking the Admiralty to make a survey, and suggesting that the expense should be borne by the United Kingdom, Canada, and Australasia. But Her Majesty's Government in Britain at that time would have nothing to do with the proposal until, as they said, there was sufficient prospect of the money being forthcoming for the construction of the cable if a survey were made. Acting under pressure, however, the Admiralty agreed to make a survey, and offered that a vessel, called the Egeria, which had to do certain work in the Pacific, would incidentally make a survey for the purposes of the cable. By this offer the friends of the Pacific Cable were mollified, and, though they felt that some years must elapse before the survey was completed, they were satisfied at what appeared1 to be something like a practical proposal. For some time they asked no questions, but at the end of a few years they began to inquire for the report of the survey. They were then informed that the ship had been taken off the survey some years before. No explanation was given - -the reply was that the vessel had been -withdrawn.

Senator Playford - That vessel was employed in a part of the survey.

Senator HIGGS - The promoters of the Pacific Cable then turned their attention to another Conference, which, seven years later, in 1894, was held at Ottawa. In the interval nothing had been done except bv the promoters themselves, in the way of gathering information which would help to persuade the general public to fall in with the idea of an All-Red or Empire cable. After considerable discussion at the Conference of 1894, a resolution was carried, on the motion of Mr. A. J. Thynne, the representative of Queensland, requesting Canada to make all the necessary inquiries, and generally to take such steps as might be expedient to ascertain the cost of constructing the proposed cable. Canada undertook the work ; and, as a result of advertisements in newspapers, quite a number of practical prominent business men, accustomed to the construction of submarine telegraphs, were found to be willing to tender for the work without any preliminary survey whatever. As a consequence of the work done by Canada, and by the friends of the Pacific Cable, Mr. Chamberlain appointed an Imperial Pacific Cable Committee, which met in London in June. 1896, and heard evidence both for and ' against the proposal. The Eastern Extension Telegraph Company's witnesses - or people who were either openly or secretly in favour of that company - got in some "very fine work" before the Committee. They held that it would be a physical impossibility to construct a cable, and that, if it turned out to be possible, it would cost ^3,000.000, and its work would be too slow to be of any practical use. Prominent witnesses like Mr. Preece, who was a high official in the British Post Office, said that the cable could not be expected to carry a greater number of paying letters than would amount to 3.5 words per minute ; and Mr. Hesse, who represented the Eastern Extension Telegraph Company, expressed the opinion that the cable would not be able to carry more than two paving words per minute. The Eastern Extension Telegraph Company held that if the Pacific Cable were constructed, it would have to be duplicated at the earliest possible moment. But the duplication of the cable would have meant no cable at all. When, later, the friends of the Pacific Cable, in order to meet the so-called argument in favour of duplication, proposed that there should be extensions from Western Australia to the Cape of Good Hope, and thence to Barbadoes, and from that island to Nova1 Scotia, or direct to England - so that the duplicate cable might* be earning money instead of in iT idle - the Eastern Extension Telegraph Company stepped in, and proceeded to lay a cable across the Indian Ocean, between Australia and the Cape of Good Hope. Prior to the proposal to construct a Pacific Cable, the Eastern Extension Telegraph Company had asked for a subsidy of about £100,000, and a guarantee from the Governments of Australia; but as soon as the suggestion I have referred to was made by the friends of the Pacific Cable, the Eastern Extension Telegraph Company undertook to construct a line without either subsidy or guarantee. Another piece of evidence in favour of the Eastern Extension Telegraph Company was given before the Imperial Cable Committee, by Captain Goodall, the commander of the company's steamer Chiltern. Captain Goodall stated that he considered an accurate survey absolutely necessary, and that soundings in that part of the world should not be more than five miles apart; that it would be far more satisfactory in every way for the soundings to be not more than one or two miles apart. Honorable senators may have some idea of what the work would mean if a survey steamer had to take soundings, at every two miles from Vancouver to Australia. The number of soundings that had to be made by the Telegraph Construction Company, which undertook to lay the Pacific Cable, amounted to no more than twenty, throughout the whole of the distance. I may mention, at this stage, another instance of the extraordinary influence that the Eastern Extension Telegraph Company had, and still have. When Sir Sandford Fleming was studying the map in an endeavour to discover landing places for the cable, he noticed Neckar Island, which is a barren rock in mid-Pacific.

Senator Playford - It is not far from Honolulu.

Senator HIGGS - It is some 300 or 400 miles from Honolulu, and is absolutely incapable of supporting any kind of life. Sir Sandford Fleming thought that the island would make an. excellent landing sta/tion. and he urged the British Government to annex it, as nobody seemed to own the place. But he could get no satisfaction from the British Government. When he was conversing with a British officer, whose opinion he had . sought, the officer asked him whether he knew how the British Government .got hold of the island of Perim. It appeared, from the statement of the officer to Sir Sandford Flemming, that- a French officer had been sent to annex Perim on behalf of. France. That officer made a stay at Aden, where he was generously and hospitably entertained by the British Resident, who discovered the mission of his guest. The story is public property, so that there can be no harm in repeating it. The British Resident, while he entertained the French officer, sent a Britisher to plant the flag of Britain on the island, and when the Frenchman got there he found 'the British already in possession. The lesson of the story to Sir Sandford Fleming was that if he desired to have Necker Island annexed for the purposes of the Pacific Cable, the best course would be to have the British flag planted at once; and with that object in view, he made an arrangement with an old British officer. In the meantime, Sir Sandford Fleming had written to Sir Charles Tupper the Canadian Commissioner, who, on receipt of the letter, deemed it to be his duty to inform the British Government as to what was taking place. Lord Rosebery, who was then in power, was very much annoyed at the action which had been taken, and declared that the island belonged to the Hawaiin Government. Whether it did or not, the fact is that some member of the British Cabinet must have informed the Hawaiian Government what was contemplated, and on- 16th May. 1904, some months after Sir Sandford Fleming proposed the annexation' of the island, the Hawaiian Government sent a steamer down and planted their flag there. Then the British Government had to appeal to the Hawaiian Government to allow them to land the Pacific Cable there. The Hawaiian Government had, in their turn, to appeal to the United States, and the United States Government refused permission, with the result that the Pacific Cable had afterwards to be landed at Fanning Island, at an additional cost to this country, and the other partners in the cable, of some ^50,000. However, the evidence in favour of the Pacific Cable was sostrong that the Imperial Cable Committeereported, in 1897, in favour of its construction, and negotiations were opened upwith a. view to a partnership. The contract for the construction of the cable was let on behalf of the six British Governments, and' the Telegraph Construction and Maintenance Company undertook to lay the PacificCable at a cost of ^1,795,000. which was more than '^1,000,000 less than the est mate given by the British postal authorities. The cable was opened for traffic on Friday, 31st October, 1902. When it was completed, congratulatory messages were exchanged by various gentlemen in high office- in England, Australia, and other parts of the Empire. Amongst others, Mr. Chamberlain cabled across to Canada -

Your great ideal has united the Empire. In the words of the Canadian poet : - " Unite the Empire - make it stand compact,

Shoulder to shoulder let its members feel

The touch of British brotherhood, and act

As one great nation, strong and true as steel."

The Right Honorable Sir Edmund Barton sent his congratulations on the completion of the cable in these words -

I trust that the connexion, and with it the community of feeling and interest, between the sister Dominions, may strengthen them and the whole Empire.

These hopes and congratulations were shared by many people throughout the Commonwealth, and Sir Sandford Fleming and the other friends of the Pacific Cable might well have been content to cry " Success!" but the ever- watchful Eastern Extension Company had been at work. This monopoly - for it was a monopoly - charged 9s. 4d. per word prior to the proposals made for the construction of the Pacific Cable, and reduced the rate only in order to block that cable. Before reducing the rate, it persuaded the various Australian Governments to give it a subsidy of £50,000 a year. This monopoly induced a Postmaster-General of New South Wales, named W. P. Crick, to consent to an agreement which was to be terminable only by mutual consent.

Senator Stewart - How did they induce him?

Senator HIGGS - Giving the Eastern Extension Company the same rights and privileges throughout New South Wales as would be given to the Pacific Cable Company.

Senator Drake - The Eastern Extension Company say that Mr. Crick suggested that clause.

Senator HIGGS - What does the honorable senator think about it?

Senator Drake - I produced some papers to that effect.

Senator HIGGS - I do not propose to discuss Mr. Crick.

Senator Drake - That was the last of the four agreements signed, and not the first.

Senator HIGGS - Since the honorable senator has referred to the question, I should say that if Mr. Crick could be got to sign such an agreement, he could be got to furnish any number of suggestions.

Senator Stewart - Did the honorable s enator call him " Mr. Crook " ?

Senator HIGGS - This agreement was s igned - and I venture to think it is illegal on that account - sixteen days after, the in- auaguration of the Commonwealth. It was signed on the 16th January, 1901, after Federation had been proclaimed, and when the Post and Telegraph Department, along with other departments, were to be transferred to the Commonwealth on a date to be fixed by proclamation.

Senator Keating - They were under the States until March.

Senator HIGGS - They were, but surely any person who knew that New South Wales was a partner in the Pacific Cable, that she had undertaken to repay her portion of the £2,000,000 lent, and her share of the cost of maintenance, interest on construction, and charges of the Pacific Cable, should have hesitated after the proclamation of Federation about signing an agreement giving the opponent company the same rights as the Pacific Cable Company in the State of New South Wales ?

Senator Dobson - Does the honorable senator know whether the New South Wales Cabinet saw or sanctioned the agreement?

Senator HIGGS - I cannot say that, but it was probably sanctioned by the Government of New South Wales. I understand that it was very nearly being agreed to if it was not actually signed by the PostmasterGeneral of Victoria at the time.

Senator Drake - It was signed in Victoria.

Senator Keating - There was a great deal of pressure by press and public in Victoria to induce the Postmaster-General of this State to follow Mr. Crick's example.

Senator HIGGS - I understand that the agreement was actually signed in Victoria, but Sir George Turner's Cabinet refused to ratify it. Senator Keating says that there was a good deal of pressure on the part of press and public in Victoria.

Senator Keating - On the part of the press and the commercial public.

Senator HIGGS - Perhaps this is a convenient place to refer to that.

Senator Dobson - The New South Wales Cabinet appear to have ratified it.

Senator Drake - Yes, they did.

Senator HIGGS - In view of Senator Keating's reference to the pressure ofthe Victorian press, I may remind honorable senators that in a letter which appeared in the Melbourne Herald of11th January, 1904, Sir Sandford Fleming said -

Long before the Pacific Cable was completed, the astute Eastern Extension Company, alive to its own interests, took time by the forelock, and made contracts with the leading newspapers of the Commonwealth, for the exclusive supply of press cablegrams. These contracts extend over a number of years.

It is easy to understand why so many paragraphs and articles appear in some of the p rincipal daily newspapers of the Commonwealth in favour of the Eastern Extension Company, whenwe learn that there is an arrangement between the company and the proprietors of those newspapers with regard to the supply of press news. It is because of this agreement we find in the daily press statements like the following, which appeared in the Argus of 27th July, 1903-

The Eastern Extension Company conducts its business on commercial lines. It supplies forms free of charge; it facilitates repetitions, and recognises its position as the servant of the public, instead of assuming that of an autocrat.

It is interesting to note the description "the servant of the public, instead of assuming that of an autocrat," when we remember that, prior to the promotion ofthe Pacific Cable, the Eastern Extension Telegraph Company charged a rate of 9s. 4d. per word. The public then could get no reduction, because the company was adamant, and assumed the position of an autocrat. Here is another paragraph which appeared in the Argus of 6th January, 1 903-

The Pacific cable service has hardly been in existence for a month, but it has broken down several times.

There have been suggestions also that the Pacific Cable Company does not transmit messages as expeditiously as does the Eastern Extension Telegraph Company.

Senator Staniforth Smith - The Pacific Cable have the world's record.

Senator HIGGS - Honorable senators will probably remember that the other day, in answering a question, Senator Keating, on behalf of the Postmaster-General, made a statement that a telegram handed in at the Sydney Cricket Ground reached London in three and a-half minutes. The Age newspaper also has taken a prominent part in condemning the Pacific Cable. Leading articles have been published in its columns dwelling upon the loss arising from the cable each year, and declaring that it is a white elephant, which costs annually a huge sum to maintain. The Argus of the 27th July, 1903, contained the statement -

The Australian States, in committing themselves to sharing the loss, made a very bad bargain indeed.

These newspapers have not told the public that prior to the establishment of the Pacific Cable - take, for example, the year 1891-2 - the Australian States were paying in the way of subsidies and guarantees to the Eastern Extension Telegraph Company no less than £59,920. This sum was paid by the five States of New South Wales, Victoria, South Australia, Tasmania, and Western Australia. In 1892-3 subsidies and guarantees amounting to £53,363, were paid by the five States mentioned. In considering the loss at the present time of some £30,000 per annum on the PacificCable, which is met by the three States of Victoria, Queensland, and New South Wales, it should be bonne in mind that prior to the completion of that cable the States of the Commonwealth were losing some £50,000 a year in the way of subsidies and. guarantees to the Eastern Extension Telegraph Company, besides paying a higher rate per word. The agreement, which was signed by W. P. Crick, after all only gives a right to do business in New South Wales. It might be interminable, as is claimed by some friends of the Eastern Extension Telegraph Company, and by others who say that it should be renewed in some form or other.

Senator Drake - It is terminable only by mutual consent.

Senator HIGGS - I suppose that Senator Drake means by that that theEastern Extension Telegraph Company will never give its consent to terminate the agreement?

Senator Drake - I do not meant hat at all. I mean to say that it cannot be terminated without their consent.

Senator HIGGS - That is to say, it will never be terminated unless the Eastern Extension Telegraph Company are given valuable consideration.

Senator Drake - Quite so.

Senator HIGGS - Although this agreement was signed by the New South Wales Government, the Pacific Cable was still safe, because we had Victoria and Queensland' as exclusive preserves for the operations of the Pacific Cable Company. But Sir Edmund Barton, the leader of the first Commonwealth Government - to my mind, very weakly - signed a provisional agreement which was said to take the place of this interminable agreement, and which was to give the Eastern Extension Telegraph Company the same rights and privileges as the Pacific Cable Company throughout the Commonwealth of Australia.

Senator Drake - But for a limited term. That is the whole point.

Senator HIGGS - Senator Drake, in his place in the Senate, has said that it was for a limited term of ten or twelve years, but other legal members of the Barton Government perused the agreement, and in their speeches induced the Parliament to believe that that provisional agreement was to take the place of the so-called -interminable agreement made with New South Wales.

Senator Drake - It supersedes it.

Senator HIGGS - There is not a line in that extraordinary document - that jumble of words which ought to have been put before the Senate in the form of a Bill - to say that, at the end of ten or twelve years, the Eastern Extension Telegraph Company shall cease doing business in Australia.

Senator Drake - Why should it?

Senator HIGGS - That question gives the whole case away.

Senator Sir William Zeal - Would it be a disadvantage?

Senator HIGGS - I feel sure that it would not be a disadvantage, as I shall point out when dealing with the question of State-owned versus privately-owned telegraphy.

Senator Sir William Zeal - We should get competition between the two lines.

Senator HIGGS - What an attitude the Barton Government must have taken up towards the Pacific Cable 'Company, when they were prepared to allow the Eastern Extension Telegraph Company to go into Victoria and Queensland and enjoy the same rights and privileges as the other company for a period of twelve years, and then, after all that, to go on as usual and get all the business it could.

Senator Drake - It would not have any special privileges.

Senator HIGGS - The Eastern Extension Telegraph Company, which has had its cables landed in Australia for many years, would have the right to go into the Court and claim damages .from the Government for being turned out.

Senator Drake - No.

Senator HIGGS - It shows how worthless was the agreement, so far as support ing the interest of the partners in the Pacific Cable was concerned, that the Government should be willing to allow the Eastern Extension Telegraph Company to go into Victoria and get even more business than the Pacific Cable Company, because it can do business in a different way.

Senator Drake - It would not get that business through the agreement.

Senator HIGGS - Fortunately for the partners in the Pacific Cable, and fortunately, I think, for the Commonwealth, the Senate was able to stop the agreement from being ratified, and the partners in the Pacific Cable were informed that the majority of the senators would not approve of any agreement until the Conference which they had asked for had been granted. That Conference has been held. I venture to say that the opinion of the people of the Commonwealth was entirely misrepresented to the other partners on that occasion, as may be seen' -from the report drawn up by and signed, by Sir William Mullock, Sir Sandford Fleming, and others. Honorable senators will observe a paragraph, which states that the Eastern Extension Telegraph Company was granted a special line from Melbourne to Sydney. No money was ever voted by the Senate for a special line for the company, and the Government should have told the partners in the Pacific Cable that the Senate only agreed to vote ^20,000 for a line from Melbourne to Sydney on the understanding that it was necessary for carrying on the telegraphy of the Commonwealth, and .also that in Committee the Senate struck out the words to the effect that that sum was required for the construction of "a special line for the Eastern Extension Telegraph Company." Was it right to tell the partner's the Pacific Cable that Australia has given a special line to their rival. The object in making that statement appears to have been to impress, our partners that Australia is irrevocably committed bv one act and another to the Eastern Extension Telegraph Company. The proper thing would have been to tell the partners how many friends the Pacific Cable had in the Senate. But, no ! the Conference was misled, and the result is. that we have a most unsatisfactory report, because all the other partners in the Pacific Cable then asked was. that in any agreement passed bv the Commonwealth, there should be a definite statement, that at the end of twelve years the Eastern Extension. Telegraph Company should no longer have any rights in Australia.

Senator Givens - Why should it have rights for twelve years?

Senator HIGGS - Apparently, the partners in the Pacific Cable agreed that theEastern Extension Telegraph Company should have rights for twelve years, because they had been Jed to believe that we were committed to that company. We are not committed to the company, because we have still Victoria and Queensland, which ought to be considered as a close preserve for the partners in the Pacific Cable. If we could keep the business of those States, we could do away with the present annual loss of £30,000 on the Pacific Cable. It may be asked, " How can we keep the Eastern. Extension Telegraph Company out of Victoria ' ' ? Section 80 of the Post and Telegraph Act says -

The Postmaster-General shall have the exclusive privilege of erecting and maintaining telegraph lines, and of transmitting telegrams or other communications by telegraph within the Commonwealth, and performing all the incidental services of receiving, collecting, or delivering such telegrams or communications, except as provided by this Act or the regulations.

Tha Commonwealth has the exclusive right of receiving, collecting, and delivering telegrams, and, therefore, the Eastern Extension Telegraph Company could be turned out of Victoria to-morrow. I do not suggest that it should be turned out right away, but that it should be given three months' notice. It has no right to be here. . I have been told on good authority that when its representative wanted to open an office, he was informed that he was to do nothing until the agreement had been passed by both Houses of this Parliament, but, with' the audacity which has characterized his employers, he opened an office. Senator Zeal has asked whether it would not be a bad thing to exclude the company.

Senator Sir William Zeal - No, to prevent the company from carrying on business. I think that the competition between the two lines is beneficial to the country.

Senator HIGGS - The view .1 take is that the Commonwealth cannot do business as a private company can. If we publish a statement that the rale should be 3s. a word, we cannot go, as a public tody, to a private) individual, and say, " We shall send your messages for 2s. rod., or 2s. 6d. per word." We cannot say to a large customer, " We shall give you a rebate on your words." We have to charge everybody alike. Surely any one who is acquainted with' business methods will not deny that it is very usual to offer rebates. Some time ago, Mr. Warren sent out a circular, in which he said that he had never heard of rebates being given, but in 1903, I produced to the Senate a card, issued by Reuter's Telegram Company - whose, shareholders, no doubt, are largely interested in the other company - stating that they were prepared to give their customers a rebate on the telegrams. Reuters is another telegraph company which, I think, ought to be excluded from Victoria, because it attracts business to the Eastern Extension Telegraph Company. If the two companies were excluded from Victoria undoubtedly we should get a barge share of the 553,961 words which are set down in the Pacific Cable Board table under the head of " State of origin or destination - Victoria and the United Kingdom." Out of those words the Eastern Extension Telegraph Company got no less than 467,493 in 1904, and the Pacific Cable only 86,468. It is no wonder that the latter company did not get half the business which was estimated by Sir Sandford Fleming when he said that it would be a paying concern. Inasmuch as the Pacific Cable was the outcome partly of the representations of commercial men in Melbourne, and the people who were suffering from the grinding rate of 9s. 4d., there, must be something radically wrong when they give to the old company 467,493 words, and to the new company only 86,468 words.

Senator Mulcahy - Unfortunately, the public are very prone to do that, even with their own institutions.

Senator HIGGS - Yes, as I have seen frequently. Take the very much smaller case of the Port Jackson Steam-ship Company, which was charging the public is. 6d. for a return ticket from Sydney to Manly. Some local residents, thinking that the fare was too high, as it was, promoted an opposition company, which fixed the fare at 6d. When the monopolistic company reduced its fare to 6d. the public forsook the new company, which was responsible for bringing about the reduction, and if had to go into liquidation and insolvency. In the interests of the general taxpayers, it is the duty of this- Parliament to see that the Pacific Cable, which brought the rate down from 9s. 4d. to 3s. per word, and which saved the commercial men of Australia no less than £750,000 a year, shall not be made an .insolvent concern. I feel s.ure that this could be prevented if the Commonwealth Government would only avail themselves of their rights, and tell the Eastern Extension Telegraph Company to confine its operations to those States which were foolish enough to sign an agreement with it. The attention of the Senate has been drawn to the want of business methods on the part of the Post and Telegraph Department in connexion with the Pacific Cable. How is it that a person can get as many indicators as he likes free of charge from the Eastern Extension Telegraph Company, and is charged by the Commonwealth ios. 6d. per year for each indicator? A business man may require to' have fifty indicators in London, in order to enable him to avoid the repetition of the full name and address at either end. He can go to the Eastern Extension Telegraph Company and get fifty indicators free of charge, but if he goes to the Commonwealth Department he has to pay 10s. 6d. per vear for each indicator. It can be understood that when the Commonwealth charges .£25 a year for fifty indicators, and the Eastern Extension Telegraph Company charges nothing, the business is almost sure to go to the latter, no matter how patriotic a business man may be. Reuter's Telegram Company has in Melbourne an office where it codes messages for the general public, and gives them every facility, but the same facilities cannot be obtained at the Post and Telegraph Department. Surely we have sufficient intelligence in the Post and Telegraph Department to supply such facilities to the general public. Our telegraph system throughout Australia is, I am pretty well satisfied, superior and cheaper than are the telegraph systems of private companies in other parts of the world. It may not be actually as cheap as the telegraph system in the United Kingdom, but it is even cheaper if we take into consideration the distance over .which our messages have to travel, and the difference in the population. In Great Britain there is a population of over 40,000,000, whereas in Australia there is a population of only about 4,000,000. But we are able to send a message in Victoria, or in any other State, at the rate of 9d. for every sixteen words. We can send a tele gram of sixteen words from Argus of the 20th October, 1.905. Mr. Henry M. Collins, the general manager of Reuter's Company in Australia, was cross-examined by Mr. Duffy regarding the re-coding of messages so as to make them shorter for transmission after a customer had had his original message coded, and had paid for it. Mr. Collins explained that re-coding was done in a separate department from the receiving office, and by means of a different code from that kept in the receiving office. Mr. Duffy asked, " So the company boils down the number of words from what a customer has paid for ' ' ? - The witness answered -

There is no obligation to adhere to the number of words in the first coding, and we claim to be quite entitled to re-code a message before sending it, if such re-coding is possible. "So," said Mr. Duffy, "you send a less number of worlds than you charge the customer for?" The witness replied: "In certain cases; it cannot always be done." But it is done, as admitted by the general manager of the company; and I may add that coding has been brought to such a high state of excellence that it has become quite - a science. I understand that the single word " unholy " will convey no less than 150 different words. It has been proposed that there shall be a pooling arrangement between the Eastern Extension Company and the Pacific Cable, in order to save expense; but I would respectfully urge that no pooling arrangement should be entered into - certainly none should be tolerated on the basis of the present receipts from the two schemes. It would be most unfair to give the Eastern Extension Company a proportion based on the business that it has been able to secure in Victoria and the other States owing to the action of Sir Edmund Barton and his Government in allowing it to cut in here. Sir John Pender, in a letter to the Conference in 1887, said that his company was very closely in touch with Her Majesty's Government at the time. How closely the company was in touch with the Imperial Government may "be gleaned from the fact that in 1893, when Sir Mackenzie Bowell came out to Australia on a mission to advocate the All-

Red Pan-Britannic line, Hong Kong was expected to be one of the landing places for the proposed British cable; but the Eastern Extension Company was able to secure from the British Government the sole landing rights for cables at Hong Kong for a period of twenty-five years. The company has a. monopoly there, and if Australia wished to lay a cable to the British territory of Hong Kong to-morrow she could not do so. That is another reason why no particular consideration should be extended to this company. As to the vital necessity for the Pacific Cable, I may, mention that one of the great arguments used4 by its promoters was stated by Mr. Hofmeyer, who represented Cape Colony, that it would be a means of safety in times of war ; and Mr. Raikes, the then Postmaster-General of Great Britain, said that it afforded a greater remoteness from possible attack by foreign Powers. Another reason is that deep-water cables are not liable to the same interruption as are shallow-water cables. I have already mentioned the circumstance that the Pacific Cable is owned by the various Governments interested on behalf of the general public, whereas the Eastern Extension Company's cables, which land in foreign territories, and might be tapped in time of war, are owned by shareholders, who might sell out their interests to foreigners. There is' nothing to bind them to keep the shares. Some foreign company might do as was done by Disraeli, who effected a famous coup in connexion with the Suez Canal shares. There is no reason why a foreign company should not buy up the shares in the Eastern Extension Company if it wanted them in the interests of its own nation. The interests of South Australia have been mentioned, and I have embodied in my motion a paragraph dealing with that State.

Senator Drake - The honorable senator's proposal is apparently that Parliament should vote a sum of money to make up the loss to South Australia.

Senator HIGGS -Possibly, if there is a loss.

Senator Drake - Has the honorable senator considered whether that is .constitutional ?

Senator HIGGS - Yes, and I will deal with that point. In 1870,, South Australia built a telegraph line across the continent to a distance of 1,970 miles, to connect with the Eastern Extension Company's cable at Port Darwin, at a cost of £506,000. For many years this line was a great source of loss to South Australia. Under an arrangement with the Eastern Extension. Company and with some of the other States of" Australia, that loss was reduced, but the total loss on the overland line to Port Darwin from the time of its opening for business in 1872 up to three years ago was ,£293,283. There can be no doubt that the State of South Australia constructed the line at the instance of the Eastern Extension Company. But it. has been constructed, and South Australia has to bear the loss. That State receives a great benefit from the messages which are sent over the Eastern Extension Company's lines in both directions, because she receives terminal rates, which bring her a considerable amount of revenue. Consequently, she is interested in the fact that the company's lines land within her territory. But it is not in the interests of the Commonwealth of Australia that the mere question of a few thousand pounds of revenue should be permitted to stand in the way of the success of the Pacific Cable. It would be far better for us to pay to South Australia the £39,000 which we are now paying as loss on the Pacific Cable, and to make that line a financial success. As to whether we can constitutionally assist that State, I would ask Senator Drake to turn to section 94 of the Constitution, -which reads as follows : -

After five years from the imposition of uniform duties of customs, the Parliament may provide, on such basis as it deems fair, for the monthly payment to the several States of all surplus re-' venue of the Commonwealth.

Uniform Customs duties were imposed on the 3rd October, 1901, and, therefore, the five years will have expired on the 3rd October, 1906. Then, section 96 of the Constitution provides -

During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

Senator Drake - Does the honorable senator think that such a payment as he proposes could be made under that section?

Senator HIGGS - In my opinion, the wording of the section is sufficiently general to enable the Commonwealth Parliament to assist any State to meet a deficiency. Under that section the Commonwealth Parliament could, I think, come to the assistance of a State in the case, for example, of a very severe drought which had brought loss and ruin on a number of families - it could come to the assistance of a State for any purpose. When we, in the interests of the commercial classes, the newspaper public, and the people generally, propose to make the Pacific Cable a financial success, and when that success is likely to entail a loss on South Australia, which has undertaken great obligations in past years, I think that in assisting that State we perform an eminently constitutional act, to which no exception can be taken. I hope I have said enough to induce honorable senators who, perhaps, have not had the same opportunities to study the question as some of us have, to vote for this motion. Further. I hope I have said sufficient to gain the support of South Australian senators, who might, perhaps, be disposed to oppose the motion as affecting their own State. In any case, I trust that the proposal will be supported by a sufficiently large majority to show the Postmaster-General that we, who represent the States, have no sympathy with any movement in favour of the Eastern Extension Telegraph Company - that all our sympathies and hopes arecentred in the success of the Pacific Cable - and that we look to him and the Government to promote that success.

Debate (on> motion by Senator Keating) adjourned.

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