In the late 1890s, two very different developments were occurring:
One implication of the first of these developments was that the Eastern Extension company would have to look for new development opportunities. The Boer War provided such an opportunity because it was vital to establish direct communication between the UK and South Africa.
The Eastern Extension Company fought continually against the construction of the Pacific Cable. At one point, as reported in the Age in July1899, "The Eastern Extension Telegraph Company on Tuesday 25 July 1899 formally submitted its proposal to lay an alternative cable to South Africa. The terms of this proposal have already been fully explained. The company agrees to entirely waive renewal of the subsidy and guarantee against competition and in addition to providing a cable from the Cape to Glenelg via Perth, is willing to at once reduce the tariff from 4s 9d to 4s per word, and make further reductions on the sliding scale as traffic increases. In return for these concessions it requires the privilege of directly delivering and collecting its international telegrams to and from the public".
After much negotiation, an agreement was reached on terms. The Adelaide Advertiser on 25 November 1899 reported the terms of the agreement as follows:
The South Australian Government, have accepted the following proposals of the Eastern Extension Telegraph Company:
During a meeting between Mr. Squier of the Eastern Extension and the Postmaster-General for Victoria in November 1899 (see West Australian 3 January 1900), "an important addition to the company's previous proposal was that they also agree that the points where the new cable will be landed shall be settled in consultation with the military authorities with the view of protecting the shore ends by fixed defences".
Discussions continued and correspondence was lost and not shared - spare the details. At the end of January 1900, the Colonial Premiers met to discuss Eastern's proposal especially in relation to the decision to build the Pacific Cable. At the end on the meeting on 29 January, a statement was issued. The Brisbane Courier Mail reported it as follows:
The Premiers' Conference concluded yesterday afternoon. "The only matter considered was the offer of the Eastern Extension Telegraph Company to lay a cable between the Cape of Good Hope and Australia but no definite decision was arrived at. The majority of the Premiers were in favour of the modified scheme proposed by the company but Mr. Philp and Mr. McLean (Premier of Victoria) thought that further information should be obtained on the subject.
The offer of the company is to lay a cable from the Cape to Glenelg, South Australia via Adelaide. They are willing:
The objection raised by the Premiers of Queensland and Victoria is that if the offer is accepted, the laying of the Pacific cable will be delayed if not entirely blocked. Mr. Philp, in an interview, said he was quite certain that the acceptance of the offer would operate in such a way as to prevent the Pacific cable being laid. New Zealand, Victoria, New South Wales and Queensland had agreed to pay a third of the cost of the line, Canada a third and the Imperial Government the balance and there was now sitting in London a committee which were making arrangements for laying the line down.
If the contract had been let for the Pacific line, none of the colonies would oppose the Eastern Company laying down as many lines as they pleased. He asserted that it was proposed to lay the line from the Cape to obviate the necessity of providing any other communication and it would be extremely foolish, on the part of any of the four contracting colonies to the Pacific cable, to give any encouragement to the present proposal of the E E.T. Company. Mr. Philp stated that he and Mr. McLean intended to cable to the London committee for an expression of opinion as to how they regarded the proposal of the Eastern Extension Company. There would not be another conference, but when a reply was received, a determination would be arrived at by means of correspondence.
It will be remembered that New Zealand expressed a strong objection to the Eastern Company's proposal".
Immediately the South Australian Premier cabled Mr Chamberlain to inquire if he had recommended that the Cape to Glenelg cable route should be accepted by the colonial Governments. In reply Mr Chamberlain noted he had received the recommendation referred to but he considered the matter chiefly concerns those colonies interested in the Pacific Cable and so he was now awaiting the decision of the Premiers on the subject.
By April, 1900 agreements were reached and the signing took place in London on 14 April. Tasmania was also a signatory. Reduced tariffs were scheduled to be introduced as from 1 May 1900 except there was no alteration to rates for non-contracting Colonies.
In April 1900, a reply to the questions sent to the Pacific Cable Board was received. The Adelaide Observer of 14 April 1900, reports as follows:
"The Postmaster-General has received a cable message giving the effect of the finding of the Pacific Cable Board on the proposed Cape to Glenelg cable in its relation to the Pacific cable. The Board came to the conclusion that competition would naturally injure the revenue of the Pacific Cable. Mr. Crick says he never intended that the subject should go before the Pacific Cable Board as he thinks some of the members were antagonistic to the Eastern Extension Company, and Australasian representatives are likely to be outvoted. He does not propose to do anything until the full report arrives, and after then a conference of Postmasters-General may be convened".
The Colonies of New South Wales and Victoria - although strong supporters of the Pacific Cable - were somewhat peeved by being left out of the agreement for reduced rates. Yes - they did want lower rates for their citizens. Yes - they did not want anything to jeopardise the construction of the Pacific Cable.
On 3 May 1900, the NSW and Victorian Postmaster- Generals (Crick and Watt) met in Melbourne and the SA Register of 4 May reported as follows:
"Messrs Crick and Watt arrived at a satisfactory understanding. They agreed to concede to the Company the right to reduce its rates to compete with any other cable that might be laid, and after doing so to return, if desired, to the sliding scale in operation before the temporary reduction.
It was also agreed that the Company shall have the right to deal directly with the public upon the laying of the Imperial Pacific cable, or any other Pacific cable, with the additional understanding that no other Cable Company shall secure these facilities before the Eastern Extension Company.
As to the claims of the Company to be exempt from the operation of the income tax and municipal rates, Messrs. Crick, and Watt were of the opinion that they could not concede this; but it was agreed that whatever amount of money the Company should have to pay in Parliamentary taxes and municipal rates should not be considered as part of the receipts when basing the automatic reduction of 6d. per word on the average revenue of £350,000.
A clause will be framed and inserted in the agreement that will give the Imperial Government, or any of the Colonial Governments interested in the cable, an opportunity of purchasing it under certain conditions. Messrs. Crick and Watt are anxious to protect the interests of the Imperial Pacific Cable.
It is also understood that before any agreement is signed with the Eastern Extension Company, the terms of the agreement shall be submitted to the Parliaments of New South Wales and Victoria. Thus there will be a delay of a couple of months before the reduced rates can come into operation in these two colonies. It is not yet known whether the Directors of the Eastern Extension Company are prepared to accept the amendments made by Messrs. Crick and Watt".
After the Eastern Extension company refused to re-negotiate the contract, New South Wales walked away from further discussions in late May.