HC Deb 09 May 1889 vol 335 cc1647-56

In moving the approval of this contract it may be convenient that I should make a short explanation to the House of the circumstances that led to its being made. It is proposed to subsidize a cable which is to be laid from Halifax to Bermuda, so providing a means of rapid communication with the Island of Bermuda, which is very important from a military a naval and a Colonial point of view. The question has been considered for a good many years and by several Governments. The War Office, the Admiralty, the Colonial Office, and the Royal Commission on National Defence which sat in 1880 have all strongly reported in favour of the absolute necessity of providing this means of communication, and one of the conditions laid down is that the communication should be direct between the two points of British territory, Halifax and Bermuda. At present the only means of communication is by the fortnightly mail service. In former times the mail service was subsidized at a cost of £17,500 a-year, and when it was proposed that telegraphic communication should be obtained, it was pointed out that this question could hardly be considered so long as the large subsidy to the Mail Service was continued. Tenders were invited on the expiration of the Mail Service contract which resulted in a reduction of the £17,500 to £14,500 a-year. This was not thought satisfactory and the service was discontinued in 1885 when tenders for a cable were called for and several received. At that time, however, it was felt that the sudsidy demanded, was higher than ought to be paid, and the question was allowed to sleep for a time until further pressure was brought to bear showing the necessity for some means of communication, because as the House is aware, there is a very large naval and military establishment at Bermuda, and in cases of emergency and indeed, even in times of peace, the necessity is obvious, for Burmuda is the central point of the North American and West India stations. The occasion often arises for rapid communication between these two points. I have no desire to detain the House or I might give several instances. In one case a ship was leaving Burmuda and it was desired to order her to Venezuela, but she could not be communicated with until she arrived at Halifax and then there was all the delay of the voyage back. It is not necessary for me to insist on the point of necessity, it is admitted by all authorities concerned. Tenders were called for in 1885, and those received are set forth in the Treasury minutes before the House. The question has been considered by successive Governments, and all have agreed in the necessity of establishing telegraphic communication between Halifax and Bermuda. The subject has received the most careful consideration, not only of the Treasury but of the Post Office and Telegraph Department, the War Office, the Admiralty, and the Colonial Office. After considerable discussion, they all agreed it was desirable this cable should be laid, and that it should be offered to public competition. It may be that some hon. Members will hold the opinion that the Government might have laid the cable and worked it themselves, but I think that anyone who carefully con ciders this question will see that there are very strong financial objections to that course. It is true, no doubt, that the Government could probably borrow money on better terms than a company could obtain it, but at the same time it must be obvious the cost of maintaining and working a cable which only forms a link in a complete service must be very much greater than the cost of working a cable by a company in connection with other services; and I believe that it is proposed to carry this cable on to the West Indies for the purpose of enhancing its commercial value, and making it available for revenue from commercial sources. The final tenders obtained are set forth in the Treasury Minutes, and think the House will agree that after tenders have been invited by public competition, unless there are very strong reasons against it, it is the duty of the Government to accept the lowest tender. In this case the Government have taken, I think I may say, unusual precautions in endeavouring to provide ample and complete security, not only for the construction and laying of the cable, but also for its maintenance in good working order. The subsidy of £8,100 which it is proposed to pay will only be payable from the time when the cable is first in working order, and only as long as it is so maintained. I do not think it can be expected that this particular link of cable will produce any very large commercial revenue, and I believe after having had a great deal to do in the negotiations, that the terms which were offered, and which were accepted by the Government are as satisfactory as the Government could have hoped to obtain. I do not know that I need say more on the subject, it has been most fully and carefully considered. I may point out also that we have taken care after specifications were made of requiring to have a sample of the proposed cable submitted, and this being submitted to the experts of the Telegraph Department, has been pronounced satisfactory for the purpose. I believe the subsidy is reasonable, looking at the work to be done. The cost of maintenance will be considerable, and I believe the work will be much better done by a Company independent of the Government, than it would be done by a Government Department. It will be necessary to provide the means of repairing accidents, and I believe it will be necessary to have a cable ship in that part of the world available at all times in case of accident to the cable. I think the Contract is one the House may accept without hesitation. Every precaution has been taken to make the conditions such that we have complete security, not only for sufficiency of capital to lay the cable, but for its maintenance in good working order.

Motion made, and Question proposed, That the Contract, dated the 12th day of April, 1889, for the Construction of a Submarine Telegraph Line from Halifax, Nova Scotia, to the Island of Bermuda be approved." —(Mr. Jackson.)


The amendment I have to propose does not in the smallest degree traverse that position the hon. Gentleman has laboured to establish. I am perfectly aware that various Committees and other bodies have pronounced it to be of great strategic importance to establish telegraphic communication between Bermuda and Halifax, and that cable communication should not traverse the dominions of any Foreign Power. I admit that, and the hon. Gentleman might even have gone further and have pointed out the importance of this means of communication to the shipping interest. I am prepared to admit that, but the matter is not of such pressing importance that it should be brought on the day after the papers are in the hands of members. According to the hon. Gentleman's own showing, Estimates were submitted in 1885. Among the tenders then received was one from this very Company to lay the cable for £8,000. Then the hon. Gentleman said the tenders of 1885 were considered excessive, and no tender was accepted. So that in 1886 the offer of this Company to do the work for £8,000 was rejected as an excessive demand, but in 1889 the hon. Gentleman recommends us to accept a still higher tender. In April, 1888, tenders were invited, and the Submarine Company offered to do the work for an annual subsidy of £6,925 instead of the £8,100 they are now asking us to pay. Subsequently they applied to be allowed to modify their tender in consideration of rise in prices since they sent it in. As everybody knows, the copper market was rigged at that time, and copper went up to an enormous price, and there was good reason to allow the Company to withdraw their tender, which they did. They then sent in a higher tender—higher than that of 1886—this tender for £8,100. This offer has been accepted, although the copper ring has long since collapsed and the price of copper has considerably fallen. The hon. Gentleman speaks of the great precautions taken, and it is stipulated in the Contract that the capital of the Company shall be at least £100,000, and that the amount expended in laying the cable shall be not less than £80,000. I asked this evening what is the capitalized value of the annuity we are asked to give to this Company, and I was met with one of those sitting down answers which sometimes succeed in preventing discussion and do not give you the information you desire. But I am sufficiently near the mark when I say that the capitalized value of this £8,100 for 20 years at 3 per cent is something like £130,000. We are actually asked to pay £130,000 or £140,000 to this Company, whose entire capital is stipulated to be only £100,000, of which £80,000 is to be expended on the work of manufacturing and laying the cable. Another point to which I wish to draw attention is this, that the strategical reasons which now exist for laying this cable will exist 20 years hence when the Contract expires, and the Government will then have either to enter into some new arrangement or continue to pay the subsidy. The fact is, therefore, we are undertaking to pay a perpetual subsidy which represents a capital of £250,000.


The minute says, "There shall be a paid-up capital of £100,000." It does not say that that is the capital.


There is no sense in the stipulation unless that is considered a sufficient sum.


So far as capital is concerned.


Of course, that is what we are concerned with. The Government have sanctioned the principle of owning and maintaining cables themselves, and I do not think the Postmaster General would agree that he could not conduct the service as efficiently as a Company, and that a Company not of the first class. Why, the right hon. Gentleman has lately come into possession of submarine communication with the Continent, and if it is desirable that Her Majesty's Government should have this international communication in their hands, it is surely all the more desirable they should have intercolonial communication under their control. I do not think the Postmaster General should submit to such a slur upon his Department. According to the agreement, if this cable fails and the Company do not repair it, then Her Majesty's Govern- ment may step in and repair it for themselves, charging the Company with the expense. But does not that contemplate a state of circumstances under which the Postmaster General, the leading telegraphic expert of the day, will be called in to do the work which the Company cannot do for itself? If the line is to be extended to the West Indies, so the much more is it necessary we should have possession of it; this suggestion of the hon. Gentleman justifies my argument. I do not want to detain the House a moment longer than is necessary, and, putting the case briefly, the sum asked for is larger than the sum which in 1886 was rejcected as excessive. The Company were allowed to withdraw a much lower tender a year ago when copper was high, and they have not returned to the original figure now that copper has fallen. Further, the capitalized value of the subsidy, even for 20 years, is greater than the amount of capital which is fixed by the Government as necessary for completing this link of cable. More than this, there are strong reasons to suppose that the subsidy will have to be continued beyond the twenty years. The contract has not been ratified by the House nor by the Company's Shareholders, and no hardship would accrue from refusing it. It is most important that a line for strategic purposes should be worked by official persons. In fact, the Government stipulate that in time of war they will take and work the cable. It would be worked, I maintain, more efficiently and cheaply by the Government; and it is important that our engineers should have training in submarine telegraphy, as they have in land telegraphy.

Amendment proposed, To leave out from the word 'That' to the end of the question, in order to add the words the proposed telegraphic communication between Halifax, Nova Scotia, and Bermuda would be better and more economically secured by a cable owned and controlled by Her Majesty's Government than by that provided to be laid by the International Cable Company, under the Contract between that Company and Her Majesty's Treasury, dated the 12th day of April, 1889, which this House is asked to approve."—Dr. Cameron.

Question proposed, "That the words proposed to be left out stand part of of the question."


I believe the Contract is a good one, but my objection is that the British Government, responsible as it is for the Empire, should cease paying subsidies, and take these cables into their own hands. We have of late years been drivelling away large sums of money on subsidies, and the House will be astonished to learn what we are now paying for cable messages. No less than £190,000 was paid last year in subsidies to submarine companies. There is £50,000 a year to the Cable Company and £49,500 to companies having cables to South Africa and along the West Coast. In addition to these sums, the Indian Government must, I think, pay about £60,000, and the Australian Government £33,000, or £35,000 to Cable Companies every year, and besides all these subsidies I find that enormous sums are being paid by the British Government every year to Cable Companies for the cable messages they send to various parts of the Empire. If the Government would only take the matter in hand and deal with the subject as a whole in connection with the trade and commerce of the Empire, I think they would affect an enormous saving by constructing the cables themselves and making a complete net work of Government cables throughout the Empire. Last year I find that the Colonial Office paid £5,000 for messages; the Foreign Office £9,500; the Diplomatic Service, £12,000; and the Circular Service £6,000. In connection with the Army and Navy £12,000 were paid for cable messages, and in addition to that, enormous sums have been paid by the Indian and Colonial Governments for cable messages to England. It will, therefore, be seen that in place of tying ourselves down to continue these subsidies for twenty years, the better policy would be to make a continuous cable connection with all parts of the British Empire, and cease paying these subsidies. Now, Sir, I must leave this matter for a moment, and call attention to two or three defects in the contract which, I think, need explanation. I find in paragraph six it is stated that Government messages are to be sent at a rate not exceeding one-half the rates charged to the general public. Perhaps the hon. Gentleman will tell us whether the rates charged to the general public are fixed, and what they are fixed at. I cannot find them fixed in any part of the contract, and I think it is ridiculous to state that the Government shall be charged one-half the rate, without, at the same time, fixing what the rates to the public shall be. In the contracts between the Colonial Governments and the Eastern Extension Cable Company, the rates to be charged to the public are expressly laid down. That seems to be a serious defect in the contract, and I have called the attention of my hon. Friend to it in order that he may look into the matter. I should also like to ask him to inform us the distance from Nova Scotia to Bermuda, so that we may have some idea of the cost of maintaining the cable service.


I think I shall be able in two or three words to show the hon. Member who has moved the Amendment that he has left out of his calculation some very important items. He has contrasted the capitalized value of the subsidy with the cost of constructing and laying the cable, and I believe the figures he has given are pretty accurate. But there are other considerations which the hon. Member appears to have lost sight of. In the first place there is the very important question of the cost of working the cable over a period of 20 years. That is a very considerable sum. Then again you will have to set aside a Sinking Fund. A cable is not perpetual. I think a fair life of a cable is not more than 15 years. The hon. Member has also left out of his account the cost of the maintenance, which again, if conducted by the Government would be a very considerable sum. I have said that in my opinion a company work cheaper than the Government. I do not mean to imply by that that the Government under the same conditions would not work as cheaply as a company, but I say they cannot work under the same conditions as a company which undertakes the contract as part of a general system. I believe if the hon. Member's Amendment were adopted it would involve the Government in an additional cost of at least £5,000 a year. I think the House, therefore, would hardly be likely to adopt the Amendment, but would prefer to give some time to the consideration of the general principle that the Government should take upon itself the responsibility of laying cables to different parts of the world. In reply to my hon. Friend the Member for Canterbury I may say he will see in the agreement that the Government messages are to be sent in priority to other messages, and that the rates are to be approved by the Treasury. I think that point is therefore sufficiently safeguarded. I believe as a matter of fact that the usual rate is 4s. per word, and in that case the Government would have to pay 2s. I hope that now hon. Members will allow a Division to be taken.

*MR. M'LAREN (Cheshire, Crewe)

I think it is obvious that the hon. Gentleman has not really answered the speech of my hon. Friend the Member for Glasgow, especially on the important point of the price to be paid. My hon. Friend stated that the contract is higher than before, although the price of copper has fallen. So many points have been raised by my hon. friend and by the hon. Member for Canterbury that I do not think the House is in a fit state to come to a decision, especially as I can can count at least 25 Members fast asleep. It would be a great advantage if we could further discuss the matter, and I beg therefore to move the adjournment of the debate.

Motion made and question proposed: "That the debate be now adjourned"—(Mr. Walter M'Laren).


I trust the hon. member will not insist on pressing his motion. I think it is the general sense of the House that the Division should be taken. I think the Secretary to the Treasury has answered all the points raised.


I do not agree with the right hon. Gentleman, for I think the Secretary to the Treasury has completely failed to answer me. I think, too, we ought to have some expression of opinon from right hon. Gentleman, on the Opposition side, who refused to enter into the contract on a previous occasion.

The House divided:—Ayes 29; Noes 152.—(Division List, No. 103).

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 148; Noes 30.—(Division List, No. 104).

Main Question put and agreed to. Resolved, That the Contract, dated the 12th day of April, 1889, for the Construction of a Submarine Telegraph Line from Halifax, Nova Scotia, to the Island of Bermuda be approved.