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Reserve Funds have three grounds of existence: The constant repairs in cables must be defrayed out of them. A certain article in the joint purse agreement provided that no alteration of tariff was to be made without mutual consent of the three contracting parties, one of which was the Indo-European Company. Branch-lines unite certain French and German possessions in those regions to our main line, and the international character of our cable enterprise is preserved, while all-British communication is also provided. 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. It is a British company, and unites all our possessions with Jamaica through the medium of Porto Rico, owned by the United States, and of a pair of small Danish islands. In these circumstances, the existing Halifax-Jamaica line, built under subsidy from Halifax to Bermuda in 1890, and from Bermuda to Jamaica in 1898, appears adequate to the needs of the case.

In 1898 a cable was laid under subsidy from Zanzibar to Seychelles, and thence to Mauritius; and next Mauritius was united to Durban in 1901. Thus, the line is duplicated, except from Aden to Zanzibar, and is entirely all-British, viâ Durban-Mauritius-Seychelles-Zanzibar-Aden. For a small subsidy a cable was laid to Sierra Leone from Ascension, thus providing another independent connection with our West African Colonies. Clearly, then, from a purely financial standpoint, a cable to India could be put out of existence by the land-line. In 1875 the cable route was totally interrupted in the Red Sea, and the land-line had won for the time. The route by cable through the Atlantic, Mediterranean, Red Sea, and Indian Ocean is 6,700 miles long. Reckoning anything over 1,000 fathoms as deep sea, the Atlantic, the Mediterranean, and the Indian Ocean are deep seas in the parts mostly traversed by this route. The cause of these frequent fluctuations has been the more or less fierce struggle waged in the Atlantic, with some intermissions, since 1868, when the French entered the field in rivalry with the British.

Much had thus been done, but more remained to do. I cannot imagine, therefore, a more ill-judged proposition. Thus her trade, which was £2,700,000 in 1868, was £54,000,000 in 1902, and, reckoning at the same ratio of progress, will be £109,000,000 in 1909. But here, again, the adverse point for Englishmen is that Asia will deal principally with the Asiatic. Again, up to 1898 all our cables landed either at Vigo in Spain or at Carcavellos in Portugal There was little reason against this arrangement, certainly so far as Portugal was concerned. The reason for this considerable success of Germany lay in her statesmanship. In other words, the Governments of France and Germany have heavily subsidized these cables, in order to provide that their communications with the United States shall be independent of any landing-place within the British Empire. 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 case £300,000, the rates shall be reduced at stated periods. British private enterprise; and a Government Committee, composed of four Colonials and only two Englishmen, declared that, 'actuated by extreme caution,' they hoped to abstract upwards of one-half of the entire Australasian traffic from those British citizens who, during thirty years, had risked over £8,000,000 of British capital in obtaining it.

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. But the risks and cost of that enterprise were so serious, and the traffic likely to be obtained so small, that it was found impossible to act without State assistance. As an instance of the risks of cable-laying, it is worth mentioning that the section between Zanzibar and Mozambique had to be duplicated at the cost of £117,000, owing to breaks constantly caused by the Rovuma River. It was 100 feet wide and 800 feet in length, divided into eighteen sections, and was laid across the river by being uncoiled from a barge floated across the stream. Turning from that policy as being utterly disastrous, there is a second policy to be considered-namely, that the State should acquire the cables of the Empire by purchase. But this action was stopped by China, whose rights it infringed, and accordingly she now is turning her attention, eastward across the Pacific.

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