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There was considerable tension and suspicion between the Pacific Cable Board with its supporting Governments and the Eastern Extension Company:
The tensions became intense as one party and then the other made attempts to become the leading player in the market. Both for their own reasons considered they had a right to be the main player. Rates charged were one of the main issues between them.
The Eastern Extension pushed for a ... in 1900. The mainland states which had been closely tied with the Eastern Extension since 1870 supported concessions which would continue the monopoly.
See also Cape to Glenelg arguments about tariff cutting - SEE ALSO SA Register 14 April for rates.
In February 1900, The Eastern Extension Telegraph Company ...Qld Report for 1899 p. 1565. SCAN
Launceston Examiner
29 March 1900
The Sydney Chamber of Commerce has passed a resolution in favour of granting concessions to the Eastern Extension Company with regard to its new cable. There seems to be a fear that, if some concessions are not made, the company will raise its rates exorbitantly between the time of the expiration of its contract and the establishment of the Pacific cable
There are, however, two sides to this question. The company does not intend to throw up the sponge the moment the Pacific cable is at work - therefore it is not going to create a bad feeling which would tell against it as soon as a competitor came in the field. The company is fighting hard to make the best terms so that it will be enabled to meet coming competition.
No one will blame it for this but there will be cause for blame if anything is done that will imperil the Pacific project. The hope for cheap cable service in the future lies in competition between the two lines. We have had enough of monopoly, but if we have to put up with one line in future, we would infinitely prefer to trust to the tender mercies of the State-owned line. Popular Governments are far more amenable to public opinion than a company whose sole object is to earn fat dividends for its shareholders.
It seems to us as if the Australian Governments are not acting >fairly with their partners in the Pacific cable project. They got others to join because they had been exploited by the company and were ready to make sacrifices to get the Imperial and Canadian Governments to become partners. Having secured their object and frightened the company with the prospect of a competitor, they are ready to make the best terms they can for themselves. It is urged that they are safeguarding the interests of the Pacific cable in the conditions they are making. This is open to doubt. They are giving the company concessions that will place it in a much better position than it otherwise would have been, and it is not sound business tactics to help a prospective rival in trade. The other contracting Governments are quite justified in complaining of the unfair action of the mainland Cabinets who may yet find that they have overreached themselves.
Launceston Examiner
7 March 1901.
It is not surprising that Canada and Great Britain, as partners in the Pacific Cable scheme, would view with alarm the action of the majority of the Australian States. The Eastern Extension Company, when it found that the Pacific Cable was likely to become an accompisihed fact, started to do its best to cripple the enterprise. It approached the various Australian Governments asking for further facilities to carry on its business and those which complied were at once granted a reduction of cable rates.The first states approached were West Australia, South Australia and Tasmania. The two first-named were interested in retaining the present service, or in the Cape extension, as they would bring business to their State lines. Their position can be understood but why the Tasmanian Government should have joined is not so apparent. The chief objects of the Pacific projects are to provide an alternate service and above all to break up a monopoly which has had Australia at its mercy for years and which has imposed its own terms. The more prudent method would havebeen, therefore, to have kept the company at arm's length and have sup>ported the Pacific line, in which so many of the Australian States are partners. But in its eagerness to grasp a temponary advantage, Tasmania gave >its support to the monopoly.
Then an attempt was made to get Victoria and New South Wales into the net. The Postmasters-General of those States wisely held aloof, notwithstanding the urgent advocacy of the "Argus" in favour of the company. In supporting the claims of the company, the Melbourne journal did not exhibit its usual far-sightedness. When the Pacific cable contract was signed and it was thought the project was assured, then the two principal States also met the company and secured the reduced rates. Now they find that the other partners in the Pacific cable are dissatisfied - as well they might be. They have gone into the undertaking from a patriotic perspective as well as for commercial reasons and they naturally object to the Australian States strengthening the position of their business rival.
Having stood the high rates charged by the company for so long, Australia should have held out for a couple of years longer and then, when there was competition, it would have had the big end of the stick. As it is the various State Governments have played into the hands of the monopolist. It would not have been surprising if Canada had backed out of the undertaking but fortunately the Dominion Parliament has taken the patriotic view of the matter and has voted its share of the cost. It will now remain to be seen whether the Imperial Government will do the same but if the directors of the company in London can throw obstacles in the way, they will not hesitate to do so.
Adelaide Register
1 November 1902
THE EASTERN EXTENSION AUSTRALASIA AND CHINA TELEGRAPH COMPANY, LTD.
PRELIMINARY NOTICE.
Upon the opening of the Pacific Cable, which is expected in a few days, the above Company will be prepared to accept Telegrams for direct transmission to EUROPE, ASIA, AFRICA, and AMERICA at its ADELAIDE OFFICES, NATIONAL MUTUAL BUILDING, VICTORIA SQUARE, or 23-23a, ROYAL EXCHANGE.
Telegrams for transmission by the Company's cables will also be accepted at the Post Office, but should, in this case be marked 'VIA EASTERN'— which indication of route is not charged for.
The Company is now prepared to register code addresses without charge. Firms not already registered will oblige by sending in their indicators as soon as possible.
Special Telegram Forms and Envelopes addressed to the Company's Office will be furnished gratis and a further supply may always be obtained upon application at the Victoria Square Office.
The above was repeated in many newspapers in South Australia and around the country with amendments to the office addresses.
Launceston Examiner
8 June 1903
The Commonwealth is beginning to reap the result of the short-sighted and selfish policy of the State Governments in connection with the cable service. For years, the Eastern Extension Company had a monopoly on which it waxed fat at the expense of the Australian public. The high rates charged and unsatisfactory character of the service did much toassist in the laying of the Pacific cable. In this latter enterprise the partners are the motherland, the Commonwealth, the Canadian Dominion and New Zealand.
As soon as the Pacific project became a certainty, the Eastern Extension Company laid down the Cape line, and offered the various states sundry inducements to allow them to open offices and otherwise consolidate their business. Had the State Governments been composed of keen business men, they would have refused to allow a rival, who in the past had squeezed all he could get out of Australia, to get a better footing.
But in order to obtain a temporary advantage, the concessions were granted, much to the disgust of Canada and New Zealand. Now, having firmly established the rival company and given it every facility for transacting business, the Commonwealth Government is finding the Pacific cable is not doing as much as expected and there is likely to be a heavy deficit to make up. The company, managed by business men, is catering in every way for its customers, while the Pacific line has been left in obscurity.
Now a start is to be made by appointing a man to canvass for business but the appointment is to be only for three months. Had the Pacific cable been in private hands, they would have had men on long since at each centre, well knowing that every pound's worth of business gained would mean so much off the deficit.
The one system belongs to a company, while in the other the people of Australia are directly interested, and will have to pay their share of the deficit. The whole affair shows with what little wisdom the system of government is carried on and affords one more illustration of how badly state-owned undertakings are fitted to compete with private enterprise.
Private enterprise versus Government management.
The much debated issue of the relative merits of private enterprise as opposed to government operational control naturally arose frequently in the discussion of whether the Eastern Extension or the Government-supported Pacific Cable would be the more cost-efficient and effective way of delivering international telegraphic communications to Australia.
The Sydney Morning Herald of 20 July 1903 noted the efforts made by Eastern to combat the perceived threat from the Pacific Cable:
"The canvassers for the Pacific Cable have called the attention of the Postmaster-General to the methods adopted by tho Eastern Extension Company for retaining their share of cable business to and from Australia. In some cases it is stated the company sends out repIy messages in duplicate, replies are telephoned to those patrons who are connected with the telephone exchange and other methods are resorted to by the company to maintain its business. Mr Drake has therefore decided to ask the Deputy Postmaster-General in each State to recommend what, in his opinion, should be done to place the Pacific Cable on the same footing with business men as the Eastern Extension Company's service".
The Examiner of 4 August 1903 favoured the private enterprise initiatives of the Eastern Extension Company.
"The Pacific cable is likely to prove a losing concern, and the loss will be due principally to the lack of common-sense and business capacity which has been exhibited in its control.
It was undertaken for strategic and commercial principles. It was deemed advisable to have a line touching only on British territory, and also to break up the monopoly of the Eastern Extension Company. The Commonwealth has already received material benefit from its construction, since it has caused the private company to greatly reduce its rates. But this reduction is offset by the loss on the Pacific venture. In order to grasp a material advantage straight off, several of the states made a fresh agreement with the company and, to get an immediate reduction in charges, granted it valuable concessions.
No business firm would have acted in this manner. It would have bided its time and kept its rival at bay in the interests of its own concern. Then, since the Pacific line has been opened, it has been choked with red tape like most Government ventures.
The commercial company, in face of opposition, endeavoured to study the interests of its customers by repeating unintelligible words, by timing its messages and putting a generous construction on code words. The Pacific officials went on the opposite tack and would not budge outside its cast-iron regulations. Merchants, who recognised that the people would have to make up any loss, tried to do their business through the Pacific line but became disgusted at the treatment they received and it seems as if it is likely to become a white elephant from sheer incapacity.
The rival ventures afford a splendid illustration of the truth that state management in commercial concerns is about the worst that can be devised. Here we have the two ventures competing for public business and the private one is simply beating the other out of the field. It is nobody's special business to see that the Pacific line pays; if it does not, there is the taxpayer to fall back upon while, in the other, the directors have to earn dividends and bend all their energies to the task.
A promising venture is being strangled by incapacity, and yet we have some among us who would hand over all our industrial concerns to be muddled by a similar set of irresponsible state officials".
Launceston Examiner
21 August 1905
As the result of the conference on the Pacific cable, lately held in London, it is understood that an effort will be made to come to an arrangement with the Eastern Extension Company to pool the business, and that in all probability there will be a rise in rates. This is in itself a bad outlook, but it is rendered more annoying owing to the fact that it has been brought about by the shortsightedness and unbusiness-like actions of the State Governments except Victoria.
Sir George Turner appears to have been the only leading politician with sense enough to realise that the Pacific cable was partly owned by Australia and that the company was its rival. In order to secure a reduction in rates, West Australia, South Australia and Tasmania signed a "perpetual" agreement although it might reasonably have been anticipated that our own Minister would have learned a lesson from the past. Instead of regarding the company as a rival and doing the best to put the Pacific project on a sound footing, the majority of the States gave away the only advantages they possessed. They strengthened the position of the company and the best to induce Sir George Turner to make the same mistake. Now it is blaming the Pacific board for the failure it so materially helped to bring about. Whilst the company tries to secure all business possable, there has been an absolute lack of push or energy on the part of its rivals.
A high terminial charge is made by the Commonwealth and what it reaps in that way, it has to pay back to meet the deficency.Instead of endeavouring to make the state-owned line attractive, sending all Commonwealth and state business over it, a spirit of indifference has grown up for which the commercial section of the community are likely to pay heavily in the future.
When the Commonwealth took over the telegraph service, it also took over the agreements and liabilities and there is some little satisfaction in finding that the Postmaster-General realises that the Commonwealth is one of the partners in the Pacific line. Had an extra inducement been offered to the users of that line, it would probably have materially increased the volume of business but the project has been left very much to struggle along as best it might. Opposition before the court was undertaken could be understood but now the Commonwealth taxpayers are partners in the concern, self-interest dictates that Australian journals should not continue to place it in an unfavourable light.
GOOD ARTICLE: http://trove.nla.gov.au/ndp/del/article/36982095?searchTerm=%22cape%20to%20glenelg%22%20cable&searchLimits=sortby=dateAsc