HL Deb 03 August 1857 vol 147 cc919-29
THE EARL OF HARDWICKE

, in rising to call the attention of the House to the contract for carrying the Australian mail, said the subject was one which had been brought under his notice by various Gentlemen who represented the interests of those great colonies in this country. He had, therefore, deemed it to be his duty to submit the subject to their Lordships' consideration. In doing so, he should shortly state that the arrangements for carrying out the postal service with Australia, which had been entered into previous to the war with Russia, had been thrown overboard on the breaking out of hostilities with that country, and that sailing vessels had, in consequence, been resorted to for the performance of that service. As soon, however, as the war had been brought to a close, the attention of the Government had been directed to the inadequacy of that mode of intercommunication. But, before adverting to the steps which had, in consequence, been taken, he might, perhaps, be permitted to present to their Lordships a few details connected with the financial view of the question. The first year after the war the cost of the conveyance of mails to Australia had been upwards of £572,000, while during the past year it had amounted to £785,356, a very large drain upon the public purse. Now he would lay before their Lordships, very shortly, the facts of the case. The Government advertised for tenders for the conveyance of these mails, and, as was usual, announced that they did not bind themselves to take the lowest tender. Nor did they; for, on the contrary, they took the highest tender, and that from a company who had at their disposal the worst possible means of performing the service; and not only that, but, when they found that the company was unable to carry out the contract, instead of annulling it, and entering into one with competent parties, they had endeavoured to patch up the matter. There were two companies which had offered to convey the mails—the Peninsular and Oriental Steam Navigation Company and the Australian Mail Packet Company. Now, as their Lordships were aware, the Peninsular and Oriental Company was a very successful company, and possessed some of the finest ships in the world, ships as well known by name as the finest ships in Her Majesty's navy. That company offered to undertake to perform the service of carrying the mails, and for that service they proffered such ships as the Simla, the Pera, the Bengal, and others of a similar class. They had also the advantage of having, at that time, three of those vessels at the other side of the Cape of Good Hope, and of, consequently, being prepared to carry the mails at the shortest notice, by merely establishing a communication between Marseilles and Alexandria; and that company offered to convey the mails for £135,000 a year if Melbourne was to be the point of disembarkation, and for £140,000 if Sidney were selected for that purpose. It was true that the directors of that company declined to enter into any covenant for penalties for non-performance of the contract; they thought that the reputation of their ships, and the fact that there would be on board an officer in charge of the mails was, of itself, a sufficient guarantee; but, while they declined to enter into any contract for penalties for non-performance, they, at the same time, refused any premium for a more speedy performance of the service, than that guaranteed; and they had, at a subsequent period, offered, under ordinary circumstances, to bind themselves by a penalty of £100 a day for every day beyond a specified time. He wished their Lordships particularly to bear in mind that that company had offered to perform the contract for £135,000 a year. Now, what was the proposal of the Australian Mail Packet Company? Why, they offered to perform the same service for £185,000 a year, and they proposed to place at the service of the Government vessels of a size and tonnage equal to those which had been offered by the Peninsular and Oriental Company, such as the Oneida, the Melbourne, the Sydney, &c.; but, the fact was, that at the time, some of those vessels were not even built; and none of them were on the other side of the water. The Oneida, a vessel exceeding 2,000 tons, was reported by that company to be ready to be surveyed on the 1st of August, 1856, and there was a little history connected with that survey which he wished to narrate to their Lordships. The ship was reported ready for surveying on the 1st of August, but she was not actually surveyed until the 20th of October, and, owing to circumstances which had arisen upon that occasion, a question had been put to the first Lord of the Admiralty upon the subject, to which the right hon. Gentleman had replied, that the Oneida had been surveyed and found unfit for service, and he did not know how it was that she had sailed, and, a few days afterwards, Mr. Wilson, in reply to a similar question, stated that the survey of the Oneida took place on the 18th of October, that the ship had sailed on the 19th, and that the Admiralty had received the report on the 20th. It was extraordinary conduct on the part of the Government that the ship should have been allowed to go to sea on the day after it was surveyed, seeing that it was now found totally unfit for sailing, and was so reported to the Government. She sailed with the mails to take her chance, and the Government appeared to have been ignorant of that fact. She proved unfit, breaking down in that portion of her machinery which was the foundation of her engines. Her machinery had, some time before, been injured and patched up again, and when a strain came to be put on the vessel, that portion he had just alluded to gave way. She found her way, at last, to Melbourne, under canvas, and again sailed, and again broke down. This company was so inefficient they were obliged to go to the Peninsular Company to borrow a ship—the Simla—to enable them to carry out the contract, for which they had obtained an amount larger by £45.000 than the other company had demanded. No doubt the margin which had been left them in the contract was the cause of this Australian Mail Company undertaking that which they knew they could ill perform. But the company were wanting in money as well as vessels, and applied to Canard a line to know whether that company would buy their ships and contract, and, receiving a refusal, they next applied to the Oriental Steam Packet Company, who stated their reasons why they would not venture to join them. All this time the Australian mails were failing, and, in the time in which five mails should go only three went. This broken-down company at last hit upon a bright plan, which he believed was not yet sanctioned, and it was in the hope of preventing it being successfully carried out that he now mentioned the subject. This miserable company, if he might call it so by way of distinction from other companies, hit upon a plan of propping up their broken fortunes, and proposed to the West Indian Mail Packet Company to unite with them, and form one great company. The Australian Steam Packet Company proposed to hand over to that company their ships and property, and to amalgamate and carry on the Government business. Altogether, they considered there would be a capital of about £600,000. But the West India Mail Company were not satisfied, got something more, and suggested, as he gathered from the printed papers, that they would be most happy to accede to the proposal if two years could be got tacked on to the period of their contract. The terms were agreed to, upon the condition that Government should grant an extension of two years' time to the present contracts of the two companies, subject to such modifications as might be deemed necessary. It appeared to him that this was a proper matter to notice publicly, seeing the condition in which the taxpayers of this country would be placed if this scheme were permitted to be carried out. The contract with the West India Steam Packet Company was made in 1851 for eleven years; and he remembered, when he was at the Post Office, thinking it might have been well to have paid the forfeit of £60,000, and formed new contracts for carrying the mails to the West Indies, seeing that so large a sum as £270,000 a year was, at present, paid for that object. It was now proposed that the two companies should unite, if the Government would concede two years' additional time for the contracts; so that, in effect, the country would have to pay an annual sum of £445,000 for the service of the mails to Australia and the West Indies, and the payment for the two years additional would be equivalent to a bonus of £900,000. Some years ago, a Parliamentary Committee sat to inquire into the state of these contracts, and that Committee reported, among other things, that, as the existing contracts expired, it would be desirable to subject them to a strict revision before renewal, and they discouraged the adoption of contracts for any lengthened period, as the Government would thereby be prevented from benefiting by improvements in steam navigation. He believed that now, in consequence of improvements in steam navigation, the Government would have plenty of offers for the West India mail service, for £100,000 or £125,000 a year, instead of £270,000. Therefore, if the Government had permitted any of their officers to sanction the agreement between the companies by which those companies would receive £445,000 a year for two years additional, they would necessarily suffer in the opinion of the public for having done what he thought one of the greatest jobs ever perpetrated—the more particularly as the Government had had it in their power to settle the business without any difficulty, as this Australian Steam Packet Company had failed in the performance of their duties. The Government, therefore, might have got rid of the contract, and formed a new one. The only additional comment he would make was, that when contracts were offered to the public they should be open and bonâ fide, and conducted without the semblance of a job of any kind in favour of the parties, either on one side or the other. There should be also a clear understanding that, on failure in the performance of the contract, there should be a dismissal with full power to form a new contract, and with no patching up of agreements and bargains with companies in an unintelligible manner by agents and underlings in public departments. The case he had endeavoured to explain resolved itself into this simple matter, that a company contracting with the Government had been unable to perform its obligations. Under these circumstances, the duty of the Government was clear. They ought to dismiss the company, and enter into the market for new contracts. Instead of this being done, the company, according to the printed documents, was to be propped up by a union with another company, and an extension of the term of contract for two years. He mentioned the circumstance for the purpose, he hoped, of effectually stopping any further progress in the matter; and he trusted the Government would deal with the Australian Steam Packet Company firmly and decidedly.

THE DUKE OF ARGYLL

said, his noble Friend had, towards the close of his speech, stated that a proposal had been made for amalgamating the Australian and the West India Mail Companies, and that the latter company had consented to the amalgamation, provided its own contract were extended for two years. He could assure his noble Friend, however, that no such proposition had been referred to the Post Office authorities; and, moreover, that if such a proposition were made to them he believed the officers connected with that department would not accede to it, unless some new conditions were inserted in the contract. But the main part of his noble Friend's speech was directed to the question whether the Admiralty and the Treasury were justified in their original contract with the company which had now the carriage of the Australian mails committed to them; and here—although he did not, of course, intend to state the case unfairly—he had made some material lapses. He was correct in stating that there were four tenders, and that practically the question lay between two of them —the Peninsular and Oriental Company and the Australian and European Company, which was now enjoying the contract; but he passed over very lightly the important matter of penalties. He was correct, also, in stating that these contracts were not made by the Post Office— they were, in fact, made by the Admiralty and the Treasury with regard to most of their details. But upon the question of penalties the Post Office had expressed a strong opinion, and had stated that they infinitely preferred that the system of penalties should be an absolute one, and operate in the way of insurance of punctuality. The mode in which it operated was to put a premium upon regularity, and in some cases a very high premium, for it was most desirable that the arrivals and departures should be punctual; and he was quite euro that the public would rather pay a larger sum for the conveyance of mails if punctuality were insured, than a smaller sum without punctuality. At the time the contract in this case was being made the Australian colonies were in a state of the greatest excitement upon the subject. Deputations came here professing to represent the colonies. Some did and some did not. In fact, the colonies appeared to be in a high fever, and it was essential that the Government should as speedily as possible arrive at the settlement of the question. In accordance with the opinion expressed by the Post Office, the following clause was stipulated as a condition of tender:— A penalty of £100 to be incurred when the contractors fail in providing a vessel in accordance with their agreement, ready to put to sea at the appointed hour, and also the sum of £100 for every successive day which shall elapse until such steam vessel shall actually proceed to sea; and also (from whatever cause arising) £50 for the first day, and a sum increasing by £50 per day for every succeeding day; that is to say, £50 for the first day, £100 for the second day, £150 for the third day, and so on increasing by £50 for every day for any time consumed on the voyage beyond the maximum number of days allowed; but so that the full amount of such penalties on any one voyage shall never exceed the proportion of the subsidy applicable to such voyage, and which penalties shall in no case whatever be relinquished. The answer given to this condition by the Peninsular and Oriental Company was that they declined to be responsible for failures in respect of the length of the voyage, or for any other failures arising out of causes which were beyond their control, and they therefore respectfully rejected the stipulations. They ended by giving the terms by which they were willing to bind themselves under ordinary circumstances, but than this nothing could have been more vague or unsatisfactory. In the fifth paragraph of their tender they said,— The time of the commencement of the proposed service must depend on the release from the transport service of the company's ships now employed in it; and after their discharge from it several months will be required to overhaul and refit them for postal and passenger service, and to place them on their respective stations in the Eastern seas. His noble Friend had spoken strongly with regard to the character of the company to which preference was given; but he had omitted altogether from his consideration this important element in the tender—that the company which obtained the contract offered to perform the whole service between England and Australia, and not between Suez and Australia only. He must say also, that his noble Friend had not very fairly represented the degree of success which had attended the efforts of the company. He was not exactly aware under what circumstances the Oneida, which carried the first mail, left the country; but it was true that she broke down, and that thereby such delay was occasioned that the company had incurred a penalty of £7,700—exceeding the whole of the subsidy; but apart from that circumstance, they had been, upon the whole, extremely punctual. The time occupied by the second mail was 1,246 hours, being twenty-two hours only over the time allowed by the contract (1,224 hours), and the delay not amounting to an entire day there was no penalty. The time occupied by the third mail was 1,257 hours, including stoppages, being thirty-nine hours under the time allowed by the contract, namely, 1,296 hours, including stoppages. The company, therefore, received a premium of £30. The time occupied for the conveyance of the fourth mail from Sydney was 1,430 hours, or 117 hours over the period allowed by the contract; consequently, a penalty of £500 had been exacted from the company. Impressed with the great importance of securing punctuality in the service, which they thought could hardly be obtained without a system of absolute penalties, the Government had accepted the tender of a company which had assented to that principle; but if the Government had accepted the tender of the Peninsular Company, they would not have been able to claim these penalties; for it was perfectly possible that the company might have represented even the break down of the Oneida as an unavoidable disaster. At all events, there might have been continual disputes between the company and the Government. Upon the whole, then, he thought the Government were right in agreeing to the contract. The sum agreed upon was no doubt large, but one-half of the amount was borne by the Australian colonies, and he was quite sure that both the Home and the colonial Governments would consider that they had done well in paying that amount in case it secured punctuality in the performance of the service. With regard to the company itself, all he could say was that it was not more than nine months since the contract came into operation, and he did not think his hon. Friend was justified in saying, from anything which had taken place during that period, that they had broken down or were likely to break down.

THE EARL OF DERBY

said, that where the Government had to deal with companies of known ability, experience, and capital, it was a very doubtful policy whether they ought to insist upon the strict enforcement of penalties under all circumstances. It was clear that in such cases the company would charge an additional sum, more than sufficient to cover them against the risk of penalties; and in the present instance the additional sum so charged was something like £40,000 or £50,000 a year. His noble Friend (the Earl of Hardwicke) had stated that at the time the contract was entered into the Australian and European Company had but one or two vessels in their possession; whereas the Peninsular and Oriental Company were ready to enter upon the service forthwith. But the noble Duke would have their Lordships believe that this was not the fact. True, they were not prepared to commence the service with vessels of the tonnage stipulated, because those vessels were at that moment engaged in the service of the Government for other purposes; what they stated, however, was that they were ready to commence with vessels of 1,200 tons, and that, although they were not prepared to bring into the service those particular vessels which were actually employed by the Government, they should be brought in as soon as they were released by the Government. He would not pretend to say in what light the company which obtained the contract should be regarded; but clearly their beginnings had not been very promising ones; for whereas under the contract they ought by this time to have brought five mails from Australia to this country, only three had yet arrived. The noble Duke said that he did not know under what particular circumstances the Oneida had left this country. He thought, however, that as the noble Duke had undertaken to speak for his colleague, he ought to have made himself acquainted with the fads. A vessel was contracted for which was to sail upon a particular day, and she was reported ready for survey. Accordingly she was surveyed, and an officer of the Admiralty reported her unfit for service. Nevertheless she sailed on the day appointed, without the Government knowing anything about it, or being able to stop the sailing of this inefficient vessel, which broke down on her outward voyage. Yet the Government knew nothing about this gross case of what he might almost call fraud on the part of the Company! Now, in his opinion, it would have been bettor had the Government abandoned the contract altogether than permitted a vessel to go to sea which their own officer had reported, and which experience had proved, to be unfit for service; and he thought it ought to be explained why a vessel which was not seaworthy was allowed to go out on this voyage. The noble Duke said that the company had fulfilled their engagements, but he (the Earl of Derby) believed this fact was not to be disputed—that the company were desirous of selling their contract. In the first place they applied to one of their unsuccessful rivals, who did perform their contract, and borrowed a vessel from them. They next proposed to transfer their contract to another company, which was already under contract with the Government, and that other company considered the circumstances of this company to be such, that they refused to have anything to do with their vessels, or to enter into partnership with them, unless they obtained from the Government an extension for two years of their own very lucrative and he must say, so far as the Government were concerned, extravagant contract. The Secretary to the Treasury, it was true, had stated that at present no official communication of such a proposition had come before that department of the Government, but that when it did come before them, it would be considered with a due regard to the public interests. That was one way of evading the question; but he wished the noble Duke could have spoken with more confidence when he said that the Government would not be parties to extending, without due consideration, the very lucrative contract into which the West India Mail Company had entered, for the purpose of patching up that which appeared upon the very face of it a most inefficient concern. For his (the Earl of Derby's) part he did not think that any such agreement ought to be permitted or have the sanction or authority of the Government; and they knew from the West India Mail Company's own declaration, that unless that agreement was made with the sanction and authority of the Government, they would not consent to take the Australian Company's vessels and contract into their hands. The case was a very simple one. There had been a complete violation of contract, and the Government were absolutely free. There was no necessity to enter into negotiations upon the subject; but they might go into the market at once and make their own arrangements, and those arrangements, he thought, they could make on more advantageous terms than those which had been agreed to. He saw no particular advantage in permitting the amalgamation of two great companies for the purpose of carrying out one contract; and he was of opinion that the Government would be deeply responsible if, with the view of patching up a particular company, they gave undue advantages to another company, which was at this moment already in possession of & very lucrative and extravagant contract

THE DUKE OF ARGYLL

said, that if he had been at all aware that it was the intention of his noble Friend (the Earl of Hardwicke) to enter into nautical details with respect to the Oneida, he would have endeavoured to make himself familiar with the subject; but he certainlv gathered from the terms of the notice his noble Friend had kindly given him, that his question was to have reference simply to the prudence of the conduct adopted by the Treasury in framing the original contract, and the manner in which the contract had been fulfilled by the company. All he knew with regard to the oneida was, that she had broken down between Australia and England, not from England to Australia.

THE EARL OF HARDWICKE

She broke down both ways.

THE DUKE OF ARGYLL

As to the details of the survey of the Oneida by an officer of the Admiralty, he had not made himself acquainted with them, never expecting that they would have formed any portion of his noble Friend's remarks. There was, however, one point to which he desired to draw their Lordships' attention, and that was the difference of time between the tenders of the two companies. The tender which had been accepted was for thirty-five days outward, and thirty-five days homeward between Suez and Melbourne; whereas the tender of the Peninsular and Oriental Company was for forty-five days outward, and forty-three homewand.

House adjourned at a quarter to Eight o'clock, till To-morrow Half-past Ten o'clock.