LORD WODEHOUSEsaid, he had lately seen a statement in the newspapers that a company which had extended its telegraphic communication as far as Sicily were disposed to carry it to Malta, but that the authorities would not permit them to land the cable upon that island. Now, he knew nothing of the merits of the company which had made this proposal, and possibly there were good reasons for refusing it; but at first sight it certainly appeared as if some monopoly were set up in favour of the existing line, that line being connected with the Submarine Company, which at present enjoyed a monopoly of the communication with France; whereas the company which sought to extend the cable to Malta was in connection with a rival line, the International and Electric Telegraph Company. The question was of some importance as a matter of principle, because it involved the mode in which the Government were to deal with the whole telegraphic system in the Mediterranean. His own opinion was that we should have done well to have Malta the centre of our telegraphic communications in the Mediterranean; and obvious reasons existed in favour of such a course. In all probability we should then have had four lines touching at this island—one from Cagliari to Malta, another from Ragusa to Malta, a third by Naples and Sicily, and eventually a fourth, which would be of still greater importance—namely, a direct line from England, pass- 1255 ing by Gibraltar; and in this case we should have held the key, as it were, of the whole system of telegraphs in the Mediterranean. He feared, however, that the opportunity for making such an arrangement had been lost. In a very able Treasury minute, dated February 22nd of last year, reasons were given for the decision which had been arrived at in favour of the Austrian line by way of Ragusa and Candia to Alexandria; but still he thought it of importance that no principle should be laid down which would prevent future independent communications from being made. He wished now to call their attention to the necessity of watching the extension of the system of subsidies and guarantees. The telegraphic system, and especially that of submarine lines was in its infancy. Although, owing to the failure of the Atlantic cable, such plans were now somewhat out of favour, and although it might at present be impossible to lay down cables of such length with safety and at a moderate expense, yet, looking to the progress of science, and the immense importance of such communications, it was not to be doubted that means would be found for overcoming all difficulties. If this were the case, of what importance did it become that the Government should not give premature guarantees, and should not for want of properly considering the lines laid down, prevent the future advantageous development of telegraphic communication! If the Government had no distinct plan upon which they proceeded they might find that they had not patronized the best lines, and what was still worse, that they had prevented more advantageous lines from being formed. We had already given a guarantee to the Mediterranean Extension Company—the Company which had laid down a telegraphic cable from Cagliari to Malta, and from Malta to Corfu. Then, since last Session a guarantee had been given to another and more important line of communication—the Red Sea line. Here he might remind the noble Earl (the Earl of Donoughmore), that the answer given by him upon this subject at the close of last Session was not altogether accurate. The noble Earl stated that the Government had under their consideration the competing lines, and although no decision had been come to, it was possible they might choose that by the Persian Gulf, whereas it so happened that the very next morning the newspapers stated, and quite accurately, that the Government had decided in favour 1256 of the Red Sea line. He (Lord Wodehouse) did not complain of that decision, which was probably the best which could be arrived at under the circumstances; and, looking to the difficulty of getting any company to undertake the work, and to the state of the money-market at that time the Government were probably justified in the guarantee they had given. It was said that the Turkish Government would proceed with their line to Bussorah, and it would then, no doubt, become a question whether some assistance should not be given to connect it with Kurrachee. Again, negotiations were in a forward state with a view to a guarantee to the Ragusa, Corfu, and Candia line; and another guarantee had been given to the Atlantic Telegraph Company. He did not know precisely what was the agreement at present existing between this last Company and the Government. The original subsidy was £14,000 from the English and one of a similar amount from the American Government; but he understood that the Company had applied for a considerable increase, and he should be glad to hear what conditions had been agreed upon with regard to it. Whatever might be the result, their Lordships would observe that these guarantees were already of considerable magnitude, and he did think that if we were to increase them some definite system should be adopted on the subject. It might be doubted how far it was politic to give any guarantees at all. In certain exceptional cases they might be necessary; but upon the whole he believed the Government would act wisely if they declined, as far as possible, to involve themselves in any such engagements. He might add that it would have been a most excellent management if some means had been found of connecting the telegraphic system with the Post Office; but he feared the time for that had gone by. He would now conclude by asking the question of which he had given notice—Whether it is true that the Proposal of a Company to lay a Submarine Telegraph from Naples to Malta has been refused by Her Majesty's Government; and, if so, upon what Grounds: Also, Whether it is the intention of Her Majesty's Government to grant Assistance, either by way of Guarantee or Subsidy, to other Companies beyond those which have already received such Assistance.
§ THE EARL OF DERBYsaid, he should be able to give a short and conclusive 1257 answer to the questions of the noble Lord. With regard to the first question that had been put by his noble Friend, Whether any proposal made by any company to the Government to lay down a submarine telegraph from Naples to Malta had been refused by Her Majesty's Government, and, if so, upon what grounds, he might state that there had been three applications made upon the subject by different parties for establishing a submarine telegraphic communication—not between Naples and Malta, but between Cape Passaro and Malta. Two of these were made by private individuals. They were made to Her Majesty's late Government, and were refused by them. The overtures have been repeated to Her Majesty's present Government, and they had been equally refused by them. The third overture had been made to the Government by the company to which the noble Lord had referred—the Mediterranean Telegraph Company, established for carrying out a proposed small line from Malta to Cape Passaro, a distance of seventy miles, if the company succeeded in making proper arrangements with the Neapolitan Government, Her Majesty's Government would not offer, upon their part, any opposition to carrying out the telegraph proposed; but that, on the other hand, they were not prepared to offer any aid or assistance to the Company. He thought the noble Lard laboured under a misapprehension when he spoke of what would have been the case if Malta had been made the great centre of telegraphic communication in the Mediterranean, and in expressing his belief that the accomplishment of that object had been prevented by the refusal of Her Majesty's Government to sanction a line of telegraph between Naples and Malta, and partly by their adopting the line of telegraph established by the Austrian Government by way of Trieste. Now, so far as Malta was concerned, he did not hesitate to say, that he thought it ought to be the central point of communication for the various submarine telegraphic lines radiating to and from the Continent; but for all that, he did not think it by any means followed, that because Malta should be the central point of telegraphic intercommunication, that therefore the Government should avoid availing itself of other means of telegraphic communication that presented themselves with the East, and consequently the Government had made a negotiation with the Austrian Government, by which, in conjunction with 1258 them, a line would be carried by way of Ragusa. He would not enter into any discussion relative to other lines adverted to by the noble Lord, but he would proceed to answer his question with regard to the Atlantic telegraph, and he was glad the question had been raised, because it gave him an opportunity of stating generally the principles on which Her Majesty's Government thought they ought to be guided in their dealings with these various companies for telegraphic communication. The noble Lord had stated that under a former arrangement Her Majesty's Government had agreed to give the Atlantic Telegraph Company a subsidy of £14,000 a year, the same sum to be received from the United States Government, but under certain conditions; and the noble Lord stated he understood that negotiations were at the present moment going on between the Atlantic Telegraph Company and Her Majesty's Government, by which it was to be agreed that a much larger guarantee was to be given to that Company. Now, in making that statement the noble Lord confounded two things together which were entirely and absolutely different—namely, subsidies and guarantees. He wished to call attention to the distinction, because it affected the basis on which the Government proceeded. The Atlantic Telegraph Company made very praiseworthy efforts to establish a telegraphic line of communication between England and America, but most unfortunately sank the whole of their subscribed capital in the attempt, and they were consequently unable, contrary to their expectations, to prosecute their undertaking effectually; and, if they were to continue their attempt, it became necessary for them to enter into an entirely new arrangement. That being the case the arrangement previously entered into fell to the ground, and became inoperative, seeing that it was granted so long only as the Company's line of communication was in process of working, and it therefore naturally and entirely fell to the ground. The Company then requested that Her Majesty's Government would either grant an additional subsidy for the purpose of raising new capital, or that they would give a guarantee on such capital as should be raised. Now, there were two kinds of guarantees, and there was also a system of subsidy, and these three modes of assisting telegraph companies were entirely and absolutely distinct from one another. In the first place, propositions 1259 had been made at various times from various companies, and among others from the Atlantic Telegraph Company, for what he would call an unconditional guarantee; that was to say, supposing the Company undertook to expend a certain sum of money for the prosecution of certain works, that the Government should guarantee to them the receipt of a certain amount of interest on the amount so expended. Now, although this had been done in one case, he held it to be an indefensible arrangement, because it was quite clear that if they guaranteed a company 4½ per cent for 25 or 50 years, they had no security that the work undertaken and stipulated for would be properly carried out, and they ran the risk of being compelled for a length of time to pay a very considerable sum of money for a service that after all might not be accomplished; and although the money might be expended and actually lost, the company would be receiving 4½ per cent upon its capital; so that the company would gain, while on the other hand the Government, in the event of failure, would lose, and in the event of success would have no portion of the profit, and derive no profit or advantage from the result. He thought under these circumstances, and that if this were to be the case, that it would be much better (though it was not a plan that he recommended) the Government should take entirely into their own hands the construction and carrying out of the works and the arrangement generally; because then, instead of paying 4½ per cent upon the company's capital, they would probably raise the money at 3½, and if the undertaking were unsuccessful they would lose no more by it than by the system of absolute guarantee; while if they were successful, they would derive all the profits over and above the outlay of capital. But in the other case of guarantee, the Government would run all the risk without any possibility of profit. He did not concur in the view that had been taken with regard to unconditional guarantees, as a principle upon which Government ought to proceed in reference to a national enterprise which was at present only in the cradle of its infancy. But a conditional guarantee was a very different thing. A conditional guarantee he took to be perfectly legitimate in a case where there was a considerable prospect of success, but where at the same time there was considerable risk of failure; and where, in the event of success, it was perfectly 1260 legitimate to guarantee a considerable and high rate of profit on the outlay, in consideration of the great amount of risk originally run by the company. In such a case he did not think it at all illegitimate to give a guarantee to a great undertaking, which if it failed the Government were not in any way responsible for, and which, if it succeeded, was likely to produce great results to the public, and great pecuniary advantage to the company. Take, for instance, the Atlantic Telegraph Company. The Government were negotiating at the present moment with that company, and the company had asked the Government for a sum of money to be expended under the supervision of the Government, and that they should have from the Government a guarantee for a certain number of years at 8 per cent on the outlay, so long as the telegraphic communication was in working order and capable of performing its functions. Now, it was highly probable that if telegraphic communication were established between this country and America by means of a submarine cable—if the company formed for that purpose, after incurring considerable risks, succeeded—he thought there was every reason to expect that the profits might ultimately become 8 or 10 per cent, or even more. If they amounted to 8 per cent—and in saying so, he was supposing that the terms were acceded to by the Government, which was not the case at that moment—but if the profits reached 8 per cent, the Government were subject to no payment whatever, while if they reached 6 per cent the Government then, on the attainment of the great and important national object, were subjected to the payment of 2 per cent and no more on the guaranteed capital. In cases where the risk of failure was great, but where the profits and pecuniary advantages in cases of success were considerable, the Government, he thought, exercised a wise and a judicious course and discretion in guaranteeing a considerable amount of interest. Then there was a third class of cases—and in these cases be alluded, not only to submarine telegraphs, but to other large matters of expenditure in connection with the Post Office and Packet Service. He thought no subsidy ought to be given, except in cases where the object in view was one of great political and commercial importance, and where it is clear that, as a mercantile speculation, unaccompanied by any subsidy, the project must inevitably fail of success. In that case I think it is per- 1261 fectly legitimate on the part of the government, for great political and commercial projects to make a payment wholly irrespective of the profit and loss that the company would otherwise sustain, and to pay a certain sum of money in aid of the company to carry out the object. In that case the Government knew the full loss the public had to sustain in case of failure; the loss was known, and whether the object was equivalent to the probability of loss was a matter for consideration. With regard to submarine telegraphs and cables, and Post-office and packet communication, he thought that absolute and unconditional guarantees could baldly be consented to by the Government. A conditional guarantee—that was to say, not a payment made but assured to the company, in addition to the interest given by the Government—was legitimate where the risk was great and the prospects of profit in case of success considerable; but a subsidy ought to be granted only where the prospects of remuneration in any other way were not such as to justify the matter being undertaken as a mercantile speculation, and when the attainment of important political and commercial objects justifies the payment of such subsidies from the public funds. In every proposition that may be submitted to the Government for electric telegraphs, he thought when projects were in other respects equal, the Government ought to give a preference to those schemes which provide that the whole line of telegraphic communication shall be, if not upon British territory, at least exclusively and absoutely under British control. Having stated the rules upon which he thought these propositions ought to be considered—namely, the solvency of the company, the magnitude of the object to be attained, the prospect of better offers, the risk to be run, and the interests to be served—the terms must always be a matter of calculation in each separate case; but it was impossible to lay down any rule as to the proportionate assistance which Her Majesty's Government ought to give, but he hoped he had stated distinctly the principles by which, in dealing with the subject, he thought Her Majesty's Government ought to be guided.
§ EARL GREYsaid, he had heard with great satisfaction the noble Earl's statement, and thought that the principles he had enunciated were perfectly sound and right; and, above all, he had heard with great satisfaction the intimation that 1262 a preference would be given to those lines that would be entirely under British control. It appeared to him to have been a very great mistake in the original arrangement with the Atlantic Telegraph Company, that the line which went from one Dart of the British dominions, Valentia in Ireland to another, Newfoundland, was to be in any way connected with a foreign Government, He thought that allowing the United States Government any control whatever over any line from one part of the British dominions to another, was one of the greatest possible errors; but he inferred from what had been stated by the noble Earl, that such an error was not likely to be repeated. He concurred with what the noble Earl had said as to the conditional guarantees; but there was one precaution that had nut been mentioned; that if they secured to the Company a certain profit on their capital, it was absolutely necessary that the Government should have some control over their working expenses, and so have the means of ascertaining that jobs were not perpetrated or extravagance permitted. He could not help concurring with the noble Lord who had put the question in thinking that it was of great importance that they should, as soon as possible, have an independent sea-line of telegraph to Malta—a line from some point near the Land's End to Gibraltar, and brought up to that central point in the Mediterranean, Malta—and it ought to be accomplished as soon as circumstances permitted.
§ LORD STANLEY of ALDERLEYsaid, he also concurred in the desirableness of having the telegraphic system placed under English control, and as far as possible on English territory. The monopoly that had been conferred on the Atlantic Telegraph Company had prevented any others from entering into competition with them, and that being the case he had hoped that the Government would hesitate in giving any pledge or promise of guarantee or subsidy until the Company had given up that monopoly. If the aid demanded was to be entirely contributed by the English Government, it was all the more essential that the Government should cancel the privilege of monopoly, and that the line should be under the entire control of England, and irrespective of American control altogether. He wished to know whether, in the case of the Red Sea line, there was an absolute or a conditional guarantee. From what he had heard he was rather inclined to 1263 believe that there was an absolute guarantee irrespective of its operation. He had always expressed an opinion that the whole of the electric telegraph communication of this country and its connection with foreign countries should be brought under the general postal arrangements, and that the expense should be defrayed by the Government. Great advantages in the shape of concentration and a saving of expense would result from such a system.
§ THE EARL OF DERBYsaid, he was quite ready to admit, that the terms obtained by the Red Sea Company, owing to circumstances, were of a very favourable character. In one sense the guarantee might be considered absolute on a certain amount, but, on the other hand, the Company contracted to the Government to have the line laid and placed in working order; so that it was not until the line was in that state that the guarantee of the Government came into operation. As to the Atlantic Telegraph Company, he was glad to say the Government had insisted as a first condition in the negotiations now pending that the monopoly of the Company should he abolished, and that the Government should be at liberty to sanction and assist any company which might be disposed to undertake to lay down other lines. If the Government guaranteed a particular Company, it was not the interest of the Government to diminish the profits of that Company by encouraging a number of competing lines. But the principle adopted was to repudiate any monopoly, and to hold the Government free to agree with any other Company if they should think it desirable to do so.