Next, the cables will probably perish altogether in thirty years. Hence the need to carry to reserve another 2½ per cent. annually, calculated to replace the capital in thirty years. This means a further allocation to reserve of £52,550 annually. Total allocation to reserve £110,200.
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 British-owned submarine cables which extends over the world shall continue to be remunerative to those whose enterprise has created it.'[1] For the elementary fact is that otherwise business men would not lay new cables, but would take up and sell their existing ones. A fair figure for interest would be £150,000.
Thus we finally arrive at the conclusion that the two cables cost annually, and must earn accordingly: For working, £41,700; for reserve, £110,200; for interest, £150,000—total, £301,900; or, say, £300,000.
As regards the rate, let us assume, as the route is 5,800 miles long, a rate of 2s. per word. That means that to earn the above £300,000 a year there must be traffic over the cables to the extent of 3,000,000 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 by a mere stroke of the pen, and are, in fact, largely dependent on the prosperity of the communities connected by cable.
The only safe and practical method to reduce rates systematically, apart from any question of Government assistance, is for arrangements to be made that, subject to earning a fair return on the capital outlay, or in this
- ↑ Second Report, paragraph 50.
