'Memorandum on the Indo-European Telegraph Department and Narrative of Events to the end of 1898' [‎3r] (5/20)

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Eastern Company’s Directors, atIio evidently viewed with great uneasiness
the possible improvement of the Constantinople-Fao route and wished to
prevent it. Although the Turks would not consent to lease the line to the
Government of India, the Ottoman Director-General of Telegraphs agreed
to a suggested arrangement with Austria and this Department to improve the
Turkish route, and verbally promised not to let the line pass into other hands.
Had the United Companies succeeded in obtaining from the Turkish Govern
ment a lease of the Asiatic line of telegraph to Eao, it is clear that they would
have held in their hand the complete management of the several lines of
communication with India and could have manipulated the tariffs almost as
they pleased. Low rates between London and Constantinople would have
been balanced by extra charges between Constantinople and Eao, and the
traffic could without difficulty have been directed by whichever line the
Companies for the moment preferred. It can* hardly be doubted that the
Eastern Company would have secured a large share of the traffic.
24. Very shortly after this the Department was asked by the Companies to
join in the Joint Purse Agreement, and
The Joint Parse Agreement. - n a Memorandum written by Colonel
Champain on the subject he says: “We were more sensible, I believe, than
“ the Companies of the real weakness of our position at Constantinople, and
“ were aware that our only safeguard against the amalgamated Companies
“ getting into their hands the Eao Line (and so obtaining the command of
“ our last feeder) lay in a verbal promise given by the Ottoman Director-
“ General. I knew from my Agent at Pera that the Companies were still
“ pressing their requests/and at any moment, in those troublous times, the
“ Director-General might have been ousted and replaced by a successor who
“ could have repudiated the unratified Agreement drawn up by Izzet Effendi
“ and myself.”
25. The general situation was therefore at this time somewhat as follows :—
The two Companies had, in spite of a protest from this Department, effected
a joint purse arrangement between themselves, and under this arrangement
the Indo-European Company, whose interests had up to that time been
identical with those of this Department, had now become a partner
with the rival route, and the least falling-off in speed or accuracy of work by
the Indo-European route would benefit instead of damaging its pecuniary
interests. The war had caused loss of confidence in the Indo-European
route, which it would be difficult to restore. The Turkish line could not be
secured by this Department, and might at any time be obtained by the
Companies, who would then have absolute control of all the routes to India.
26. When this Department joined in the Joint Purse arrangement there was
no longer any inducement to compete for traffic, as there had been before
when the two routes were in keen competition, and consequently considerable
savings were effected in advertising and agency An office of the East India Company and, later, of the British Raj, headed by an agent. charges. The terms of
agreement provided for a division of all receipts on a certain fixed basis so
long as the lines were working, but if any of the lines were interrupted a
lower percentage had to be taken, which secured good working and the prompt
repairs of any interruptions.
27. It has been argued that this agreement prevents any reduction of tariff,
but Art. V. only provides as follows:—“No alteration of tariff or rates for
“ messages originating so far as relates to their transit between
“ Europe and India to be made without mutual consent,” and this merely
stipulates for a continuance of the practice which had been invariably
adopted previously of agreeing between ourselves as to modifications of tariff
or rules required at successive conferences. According to the International
Convention tariffs can only be modified by common consent, and it is expressly
laid down that any alterations “ should have for object and effect not the
“ creation of competition in charges between existing routes but, on the
“ contrary, the opening of as many routes as possible to the public at equal
“ rates.”* Even if this Department did not belong to the Joint Purse, we
could not reduce our tariffs without the consent of the other administrations of
the Telegraph Union, and in face of this regulation they could hardly agree to
7556. B