Australia - International.
Setting international cable rates.

The arguments about cable charges were endless - from 1872 onwards. They discussed the components of tariffs, the concepts of tariffs and the bases on which tariffs could be based as well as the data on which arguments were based. There are hundreds of references to Cable charges in Annual Telegraph Reports, Correspndence between Colonies and Deparments, Newspapers, Books, etc. A sample of just four are included here to provide a brief insight into the nature of the arguments and the conditions formed.

  1. the components of the charges for telegraphic communications;
  2. Nature of the subsidy;
  3. Basis for further negotiations with the Company.


1. The components of the charges.

Sydney Morning Herald (12 June 1873) highlights the components of the charges on telegraphic communication and shows both sides of the arguments for and against subsidies.

The Select Committee on Telegraphs naturally directed its attention to the cost of European telegrams, and the possibility of reducing that cost. Out of the £9 7s. 6d. which is charged for a minimum message, it appears from Mr. Cracknell's evidence, that the following distribution is made:

Official entity Receipt from the £9 7s. 6d.
New South Wales 5s
South Australia 20s
British Australian Company £3 15s. 2d
Dutch Government 4s
Extension Company £1 13s. 2d
Indian Government 8s. 6d
Eastern Telegraph Company £2 5s. 8d.

It will be seen that the heavy part of the charge is that made by the British Australian Company, and it is here therefore that there is the greatest possibility of reduction. At the same time we have only two modes of reasoning with a company:

  • to convince them that a lower tariff would increase the profit;
  • to offer a guarantee in the shape of a subsidy.

We must remember that, though for many years the Colonial Governments negotiated with different parties about cable subsidies, at last the immense boon of telegraphic communication was given to us without any cost to the Government at all and by the unaided enterprise of  British capitalists. The speculation was a hazardous one, and the annual value of the Australian messages was very largely a matter of conjecture.

Capitalists who go into great risks naturally look for corresponding profits and, as they have no certain monopoly, they are hardly to be blamed for trying to make the most out of their investment while they can. On the whole we have a great deal more for which to thank the company than to blame it. At the same time we think there is now sufficient evidence as to the stability and growth of the Australian business to justify the company in reducing the rate of charge and an experiment in that direction could do no harm.

The present annual value of the messages is said to be about £80,000. It is almost certain that, even at present rates, the business will steadily increase while a reduction would be sure to give it a great stimulus. The high charge leads to a great deal of "packing" that is, the use of a cipher by which a simple word stands for a whole sentence, and of course all cipher messages are more liable to misapprehension than where the words used make sense. A lower charge would very probably lead to a diminished use of cipher. Even if it did not, the number of messages would certainly be increased. As the company's staff is adequate to undertake much more work, the expense would not be appreciably augmented.

Our Adelaide telegram in Monday's paper stated that the overland line was overworked. If this refers to the officers at the different stations, their number must be increased. If it refers to the capacity of the wire, it must be duplicated. But we have never heard that the cable is incapable of transmitting more than its present quantity of work.

The recent intelligence from England informs us that a considerable amalgamation has taken place amongst telegraphic companies and the British-Australian line will simply be a section belonging to a large and powerful company. It is quite probable that this company may find it to its interest to lower the tariff till the cable is put to its full work.

The cheapening of messages would, to a considerable extent, answer the purpose which is aimed at in the proposal for a Government message. The chief objections witnesses made this proposal were that it is outside the functions of Government to become purveyors of news and that no agent appointed, however skilful or energetic he might be, could possibly get possession of the latest imprinted news so quickly, so completely or so accurately, as is done by those agencies which make the collecting and vending of news their special business.

Connected with the cheapening of telegrams is the duplication of the line of communication. Both the cable and the overland line have worked well and the interruptions have not been either frequent or prolonged. Still the fact remains that for all the distance from Sydney to Singapore - in fact at present for all the distance to Madras - we are dependent on one line and a break on any section of that line stops our communication. As a matter of fact, since it was opened, we have had an interruption on each section. We would have some security against such interruptions if we had a duplicate line as far as Singapore, that is, as soon as the projected line from Singapore to Calcutta is carried out.

Mr. Todd is of opinion that, if there is a duplicate line, it ought to take the Madras route as that would employ less land line where the atmospheric conditions are not favourable to its working. But Mr.Cracknell and Mr. James both prefer the communication with Singapore as this would give two distinct lines throughout. At present rates of construction, the cost of the line from Normanton to Singapore would be about £800,000, and our readers are aware that at the late Conference, our Government agreed to join Queensland and New Zealand in subsidising such a line as well as one to New Zealand.

Although private enterprise was equal to the task of giving us one line, it cannot be expected to furnish us with two competing lines. If we want a second, we must give a subsidy and if we are to give a subsidy at all, it is better spent on promoting a second line than on simply cheapening the tariff on the existing line.

The subsidy suggested for the present cable is £30,000, - but 5% on £800,000 is only £10,000 more while there will be the advantage of a double route and the prospect of largely recouping the cost by the profits of messages. We observe, however, in the English papers that some discussion is going on as to the practicability of making much lighter and cheaper cables and it seems not unlikely that experiments will soon be made to test this question. It is possible that we maybe on the eve of great improvements in the construction of submarine cables. It might be as well, therefore, to be cautious about promising subsidies for a long term of years to cables of a type that in a short time may be considered old-fashioned".

2. The nature of the subsidy versus increased revenue.

To: The Hon. the Chief Secretary, South Australia.

From: Electric Telegraph Department.
Office of Superintendent,
Adelaide, September 9, 1873.

Sir, In reply to your minute of the 21st ultimo, requesting a report as to the best course of action to be pursued in effecting a reduction of the present charges of through-messages between Australia and Europe, I have the honour to recommend strongly that the Government should communicate with the Governments of Victoria and the other Colonies, calling attention to the desirability of obtaining a reduction in the tariff on Anglo-Australian and foreign telegrams by means of a subsidy.

It may, perhaps, be doubtful whether Queensland would join in any general scheme for subsidising the present cable, but it is so evidently to the interest of Victoria and New South Wales, who make extensive use of the line to effect a reduction, that I should think they would readily join in any arrangement having that object in view, and would contribute their fair quota to any reasonable subsidy which,would bring the through rate between Port Darwin and Great Britain down to, say £5 or £5 10s.

New Zealand is also largely interested in this, and would be more so on the projected cable being laid.

The offer of the B. A. T. Company in December last was as follows:

  • will reduce London-Darwin to £5 10s for annual subsidy £30,000,
  • subsidy is reducible by £400 for every 500 messages over 22,000 passing jointly over Extension and Australian lines in the year;
  • an amalgamation of trans-Indian lines is probable and any reduction of subsidy must be measured by traffic and not by revenue on Australian capital;
  • Australian transit rate, Darwin-Singapore exclusive - Java Government rate to be 24 francs (19s. 2d.), and the same between Java and Darwin;
  • details of the agreement to be settled in London.

But the subsequent amalgamation with the Indian Extension Company and the Singapore and China Telegraph Company may, with the threatened competing line to Normantown in view, induce the present company (i.e. the Eastern Extension, India, Australasia, and China Telegraph Company, Limited), to accept more moderate terms. I would suggest, therefore, that, in the event of Victoria being disposed to join in a subsidy, communication should be opened with the chairman of the company. Lord Monck to obtain a fresh offer on the basis of a through rate between London and Port Darwin of £5 messages of 20 words, including name and address, the South Australian overland rate to be reduced proportionately. In communicating with the company, it would be well to urge the adoption of a minimum rate for 10 words instead of 20, and a word by word tariff for all in excess of that number.

This, in my opinion, would tend largely to increase the number of messages and would remove the necessity which now exists for sending short messages through other agencies.

"I have, etc.,

(Signed) Chas. Todd,
Postmaster-General and Superintendent of Telegraphs.


3. Negotiations with the Company.

Memorandum for the Honourable the Chief Secretary, Victoria.

The letter from the Chief Secretary of South Australia, dated l0th September, 1873, invites the attention of the Government of Victoria to a proposal by the British Australian Telegraph Company for a reduction in the charges on Anglo-Australian telegrams, and encloses copy of the report from Mr. Todd, Postmaster-General and Superintendent of Telegraphs, on the same subject:

The proposal of the British-Australian Telegraph Company, which has, it is stated, been since confirmed by the amalgamated company, is to the following effect. That in consideration of an annual subsidy of £30,000 the company will reduce the charge on messages between London and Port Darwin to £5 10s. as the minimum rate, such subsidy to be reducible by £400 for every 500 messages over 22,000 passing over the lines in the year.

It is stated that South Australia would be prepared to pay her proportion of the above subsidy calculated on the number of messages received and dispatched by each colony, and that the Government will in such cases reduce the charge for transmission over her land line to Port Darwin.

Mr. Todd suggests, in the event of the Government of Victoria consenting to join in a subsidy, that an endeavour should be made to obtain better terms than those already offered, and mentions £5 as the minimum between London and Port Darwin for messages of 20 words, including name and addresses, the South Australian overland rate to be reduced proportionately. Mr. Todd also suggests that the company should be urged to adopt a minimum rate of 10 words, with a word by word tariff thereafter.

The question, however, for immediate consideration appears to be: Will Victoria join with the other colonies in subsidising the company to the extent of £30,000 per annum on the terms and for the consideration above stated ?

Should such an arrangement as that indicated be agreed to, the colonies will, according to the returns of business from 15th December, 1872, to 23rd August, 1873, have to contribute in the following proportions:


No. of Messages.

Proportion. Amount.
Victoria 2,771 47.2 £14,100
New South Wales 1,851 31.5 £9,450
South Australia 657 11.2 £3,360
Queensland 236 4 £1,200
Tasmania 49 0.8 £240
New Zealand 298 5.1 £1,530
Western Australia 14 0.2 £60
  5,876 100.00 £30,000

It is suggested in Mr. Todd's report that the colony of Queensland may decline to enter into the arrangement in which case the amount payable by Victoria would be (all the other colonies being parties to the agreement) £14,773 per annum.

The advantage to the colonies that would be gained by this outlay would be a saving of £3 3s. 6d. on each telegraphic message transmitted between London and Australia.

The present charges are: On messages not exceeding twenty words, inclusive of address and signature, London to Port Darwin: £8 6s. 6d.; Port Darwin to Adelaide, £1 giving £9 6s. 6d., for the through message exclusive of any local rate which, in Victoria, is 2s.

According to the proposition submitted by the Government of South Australia, the charges on a message of twenty words, including address and signature, would be: London to Port Darwin say 13s giving £6 3s. for the through message exclusive of local rate, showing a reduction of say 34 per cent on existing tariff, which it is presumed would also apply to messages to and from other parts of Europe and the East.

There is no reason to suppose that this reduction would be sufficient to bring about such a general use of the company's lines as to increase the number of messages to the minimum named, viz, 22,000, and there would therefore be but little prospect of the subsidy being lowered in consequence of the number of messages exceeding thatminimum.

It does not clearly appear why 22,000 is fixed as the number of messages per annum that must be reached before any reduction in the subsidy will be allowed.

The returns of the Australian business transmitted over the company's and South Australian lines show 8,515 messages per annum, of the value of £110,683, or an average of £12 19s. per message, of which the company receives, say £98,694 or an average of £11 11s per message. The proposed reduction is say one-third of the existing rates or equal to £36,894 per annum on the through message of which the company would lose £32,898. The amount of subsidy demanded is £30,000 per annum which would leave the loss to the company, supposing no increase of business took place, at £2,898 per annum, or equal to 376 messages. But if, as may reasonably be expected, an increase of 50 per cent, were to take place, the account with the company would stand thus :

12,817 messages at £7 14s.
(reduced average)
Subsidy £30,000
TOTAL £128,690
Present annual receipts £98,694
Increase under reduced tariff £29,996

It is also difficult to understand on what basis the calculations have been made for the reduction of the subsidy when the number of messages shall have reached 22,000. £400 on every 500 messages would seem to be altogether inadequate when the receipts by the company on 500 messages at the reduced average of £7 14s. would amount to £3,860.

The only explanation that suggests itself of the seeming unreasonableness of the proposal of the company is that the capacity of some portion of the line, probably in the Mediterranean, would be overtaxed by the expected increase of work, and that an additional outlay of' capital would be necessary in order to meet the altered circumstances. It is, however, hardly conceivable that any increase that is likely to take place - say 50% - only gives 13 messages per working day - would have this effect.

Under all the circumstances of the case, and considering that the offer under notice is now nearly ten months old, and that an amalgamation of certain of the cable companies has since taken place, it appears desirable to decline the proposal in its present shape, and to adopt the suggestion of Mr. Todd, that a fresh offer be obtained, if possible, with á minimum rate for 10 words instead of 20, and a word-by-word tariff for all in excess of that number. In the event of this being agreed to, I think that the community would be largely benefited and that messages relating to domestic matters, which are either completely shut out by the present high charges, or sent through agencies in packed messages, would then be sent through the ordinary channel, to the great convenience of the public and increase of business.

No allusion is made in the correspondence now under consideration to the allowance to be made by the company in case of a break in the line; but this, it is presumed, will not be lost sight of, if it should be decided to accept the terms offered.

(Signed) Edward Lanotox,
Minister Administering the Post Office and Telegraph Department.
General Post Office, Melbourne, October 8,1873."

Reduction of Telegraph Rates
South Australian Register - 28 February 1874.