George Peel

“ Such, then, is the marvellous and world-wide system organized, in somewhat more than a generation, by private citizens of Britain. Viewed in its broadest light, their enterprise has been during modern times the prime agent in that adjustment of men's passions which is called diplomacy, and in that equilibrium between the works and wants of man which is called trade. ”

“ So France seized the south and Russia the north, and Germany acquired her existing possessions of 80,000,000 inhabitants in the centre of China. But Americans, Dutch, Germans, Russians, and French all want their own cables and telegraphs. Japan, and China herself, naturally emulate these exemplars. How was it possible for British citizens, now actively attacked and depleted by the Pacific cable enterprise of their own Government, to make headway against the conditions of trade, the facts of geography, and the ambitions of foreign nations thus briefly enumerated above? ”

“ This singular proposal, if adopted, would play directly into the hands of the foreigner—e.g., of Germany. For, if our existing British-owned cables are to be competed with by our own Government as well as by Germans and others, their profits would entirely disappear. The cables would be taken up or abandoned, the British capital would be lost, and British private cable enterprise would vanish from the North Atlantic. The German companies, who live on their State subsidies, would occupy the field abandoned by ourselves. ”

“ Everyone agrees that the telegraphic communications of the Empire should be as cheap as the circumstances of the case allow, should be efficient in point of speed and accuracy, and should be controlled by ourselves. It would be a waste of words to establish these obvious propositions, and accordingly I shall confine the following observations to a consideration of the Imperial policy best calculated to preserve, or to secure, such desirable results. ”

“ Let me examine, then, the connections between Great Britain on the one hand, and the most important of her Colonies and possessions on the other; the connections between these Colonies and possessions, inter se; and also the connections between the British Empire as a whole and foreign nations. From the mere statement of the facts, certain conclusions will suggest themselves naturally, while hasty and ill-considered opinions will similarly disappear. There are twenty British cable companies. They own about 121,000 miles of cable. The market value of their capital is £22,300,000. ”

“ Russia procured a cable from Chefoo to Port Arthur, and Germany a cable from Chefoo to Kiau-Chau, and thence to Shanghai. Britain herself arranged for a cable under subsidy from Wei-Hai-Wei to Chefoo. So far I have dealt with the great struggle which has been in process since 1870 for predominance on the coast of China and possession of the China traffic. Great Britain has not been beaten, though, of course, an overwhelming victory was impossible without more State support than that afforded by the British Government. But let us now step from the coast eastward into the waters of the Pacific. ”

“ Here British private enterprise, now so sorely bestead by the competition of its own Government cable, has had to cope also with the strenuous rivalry and national ambitions of Holland, Germany, France, and America.
In the Dutch Indies Holland possesses one of the finest empires in the world. It was acquired by the Dutch early in the seventeenth century, when they evicted us wholly from that vast region, inflicting a blow from which we have never recovered in the Far East Since that date they have always looked suspiciously on England, and opposed her progress in those waters. ”

“ There is a good deal of instruction to be drawn from the above facts. People who urge the State to compete in laying cables against its own private citizens forget that this may result in the ruin of the private enterprise, already hard pressed by foreign rivals; so that the State itself will have eventually to embark upon that business at great expense. ”

“ Cable communication with the new American Empire was indispensable. Should the State undertake it, or should private persons? Her statesmen decided for private enterprise, and, accordingly, in 1908 the Commercial Pacific Company laid cables from San Francisco to Honolulu, thence to Midway and Guam, and thence again to Manila. The Philippine traffic, which previously had to pass wholly over the British cable to Hong Kong, now round an independent route direct to America. To tap the China traffic, the Americans further laid a cable from Manila to Shanghai. ”

“ It is the Job of cable companies.
To begin with, Cuba provides the bulk of the West Indian traffic, but Cuba is now a republic under the dominion of the United States, so that the West India and Panama Company has never benefited from the Cuban traffic, because the natural outlet for that traffic is through Florida. Next, there is French competition. A line of French cables, largely subsidized by the State, unites New York to San Domingo, and from San Domingo radiates on all sides, south, east, and west to Venezuela, Cuba, and the French possessions of Martinique and Guadeloupe. ”

“ Stated mathematically, if a cable of 500 miles gives a speed of 120 letters a minute, the same cable prolonged to 1,000 miles would only give a speed of 80 letters a minute. Hence the cables are landed in Canada or Newfoundland, as constituting a convenient half-way house on the road to the rich American traffic centres. It is by being allowed to collect a portion of that traffic in the United States by the agency of their American connections that our five British cables chiefly maintain their power to live. ”

“ Great Britain and the Far East.
By the words 'Far East' I mean ten political aggregates: the Malay Peninsula, the Dutch Indies, Siam, North Borneo, Indo-China, China, Korea, the Philippines, Japan, and the Pacific Islands. It is impossible to explain the cable position in that vast region without a few words upon the factors governing its trade and politics, for trade feeds and politics regulate the number and nationality of the cables.
(a) Viewed very broadly, the foreign trade of the majority of those countries is less expansive than enthusiasts suppose. As the best authority. ”

“ Lastly, on a capital outlay of £2,500,000 a return of interest is necessary; otherwise no one would engage in so serious an enterprise. 'We remain firmly convinced,' said the Cable Committee of 1902, 'that it is of paramount importance to the country so to direct its telegraphic policy that the great network of Britishowned submarine cables which extends over the world shall continue to be remunerative to those whose enterprise has created it.' [25] For the elementary fact is that otherwise business men would not lay new cables, but would take up and sell their existing ones. ”

“ For we should not go to war with Portugal, and if we went to war with any other Power, Portugal, being a neutral Power, might preserve the cables landed on her shore intact against a belligerent. Nevertheless, for further security, a special cable, as mentioned, was laid in 1898 direct from here to Gibraltar and thence to Malta, at a cost of £806,000, while a land-line across France, over which the bulk of the Indian traffic used to pass to Marseilles, and thence by cable to Malta, was given up. An all-British connection was thus successfully established. ”

“ My conclusion on the Australasian section of this subject is that British cable enterprise, while contending in all parts of the world against foreign rivalry, has received, in Australasia and the Far East, its severest blow from the Imperial Government, a policy directly contrary to the advice of the Committee on Cable Communications of 1902. ”

“ From 1870 to the present time, Germany, Spain, Portugal, Morocco, Tunis, France, Italy, Austria, Greece, Tripoli, Crete, Cyprus, Turkey, and Russia have allowed British capital and British enterprise to connect them with our system, in complete reliance upon the proved international uprightness and fair dealing of our citizens. It is sometimes said that the Imperial Government should buy up British cables and manage them itself. ”

“ Reserve Funds have three grounds of existence: The constant repairs in cables must be defrayed out of them. Next, after a certain number of years of life, a cable becomes unworkable, and, repairs being no longer . available, must be renewed out of the Reserve Fund. Thirdly, modern trade and strategy cry out for alternative routes of cables between points of importance. But alternative routes of cables create no fresh traffic between the points thus additionally connected. Hence, the new cables should be charged not to capital, but to reserve. ”

“ As soon as the Trans-Siberian route had been finished, connecting Russia by land-line with Vladivostok, this Danish company undertook to unite Vladivostok by cable with Japan, and Japan with Shanghai. Tins was done in 1871. As if this was not enough, they laid cables in the same year from Shanghai to Amoy, and thence to Hong Kong. The Asiatic coast was thus linked up continuously in 1871 from Vladivostok to Singapore, and the Danes had filled the area north of Hong Kong. In 1888 they duplicated their Vladivostok-Japan-Shanghai cables. ”

“ That means that to earn the above £800,000 a year there must be traffic over the cables to the extent of 8,000,000 words. This is an amount of words greater than the entire Australasian traffic with Great Britain, Europe, and America. Thus it is evident that if cable enterprise is to be conducted on anything approaching business Principles, reductions of rate are not to be accomplished y a mere stroke of the pen, and are, in fact, largely dependent on the prosperity of the communities connected by cable. ”

“ Dividing up the Japanese imports and exports into Asiatic, European, and American, the Asiatic come easily first, while the American and European about balance each other. But how, in the long-run, can we compete against the Americans, with their Philippine base, their Pacific seaboard, and their boundless resources? ”

“ Then the famous gold boom began, and the expansion of traffic thus caused has enabled a splendid quadruplicate system to be built up, uniting South Africa with the outside world. (3) In the future, foreign competition from Germany and France may be expected on both sides of Africa, and, indeed, has already begun on the West Coast. (4) In the future also South Africa may enter, as already appears to be the case, upon a period of stagnation, as is the case with Australia. ”

“ On the whole subject of our connection by cable with Canada there seems no reason for disputing the conclusion of the Inter-Departmental Committee on Cable Communications, which sat in 1902 under the presidency of Lord Balfour of Burleigh. 'The Atlantic companies,' it stated, 'have received no subsidies; they provide, under the influence of competition, an efficient service at a low rate, which they have attempted. ”

“ There is a third policy to be mentioned, and this is the right one. Clearly, though the State should not itself compete with, or embark upon, cable enterprise, yet, on the other hand, that service is of such extreme importance to the Empire that the State cannot stand aloof from its supervision. ”

“ Besides the initial cost of a cable, there is the cost of its maintenance, repair, and replacement We have to consider not only the natural causes of decay, but also damage from external causes. No doubt the causes of faults and breakages, as well as the cost of repairs and maintenance, vary in every sea and with every cable. ”

“ The reason for the singular multiplication of sixteen cables in the North Atlantic is mainly, of course, the profit to be obtained by conveying the immense volume of commercial messages passing between the United States and the European world. ”

“ These powers, judiciously and temperately exercised by a committee of all the Government departments concerned—viz., the Treasury, Foreign Office, Admiralty, War Office, India Office, Colonial Office, Board of Trade, and Post Office—are ample to secure the interests of the public against the interests of any section of the community. ”

“ Clearly, the only solution of this problem was for British enterprise to construct a line of submarine cables to India. Private citizens proved enterprising enough to attempt the task. It was accomplished in 1870. The first cablegrams were transmitted to India in June of that year. But no sooner had the route been established than a serious difficulty arose. How could the cable compete with the land-line? The land-line is 4,800 miles long. [7] The route by cable through the Atlantic, Mediterranean, Red Sea, and Indian Ocean is 6,700 miles long. ”

“ The receipts from the traffic between India and Europe and America, which in 1879 had been about £320,000, had risen very slowly up to an average of £352,000 by 1900. In view of the great capital outlay involved in the laying of new cables during that interval, this was not a high return. The reduction of tariff then arranged might mean a considerable reduction—at any rate, for a term—even in this revenue, such as it was. ”

“ A copy has been placed at each of the offices of the companies, in towns at home and abroad, in which they are permitted to deal directly with the public; and the officers of the companies have received instructions to assist the public in coding and decoding their telegrams. Also, wherever the companies deal directly with the public, receivers of telegrams are able to register their names and addresses free of charge. The full title of the volume is 'Viâ Eastern Telegraphic Social Code.'
Cable Finance. ”