HC Deb 22 February 1861 vol 161 cc830-9

said, that in rising to call the attention of the House to the state of the packet service between this country and North America, he wished to observe that he was in no way connected with any of the steamship companies trading with the United States, or with the ports from which the vessels sailed; but, as a merchant carrying on business with the United States, he felt a deep interest in securing the most regular and speedy communication possible between the two countries, and as a member of that House it was his duty to see that for the large sums of money granted by Parliament in the shape of subsidies the country got value received. They now paid to the Cunard Company £173,000, and to the Galway Company £78,000—in round numbers, £250,000 per annum—for the conveyance of mails between this country and the United States. Every shilling was money thrown away. Subti- dies might be absolutely necessary in many cases, but whenever there was effective competition on any ocean, then the system of subsidies ought to cease. That was the almost unanimous opinion of mercantile men, and it was confirmed by the result of Lord Canning's Committee which, in 1853, arrived at the same conclusion. Upon the North Atlantic such a competition did exist. The Packet Committee of last year also declared their conviction that it was quite practicable to dispense with large subsidies in cases where the ordinary traffic supported several lines of steamers, and that, under the circumstances which had for some years existed in regard to our communication between this country and North America, no such subsidies were required to secure a regular, speedy, and efficient postal service. Now, was the Committee justified in arriving at this decision? They would believe it was, from the fact that on the North Atlantic there were at the present moment no less than ten competing lines of steamers; and it was another remarkable fact that more than half of the whole number of British passengers to America in the past year were carried by an unaubsidized company—the Liverpool, New York, and Philadelphia Line. Large subsidies, instead of encouraging competition, prevented it. Were they withdrawn on the next day from the North Atlantic lines the public generally would be secured all the advantages which a fair field and no favour always produced. The right hon. Gentleman, the Chancellor of the Exchequer, might admit all that to be true; but he would probably say the Government was bound by existing contracts. But let him ask how these contractors performed their obligations. The right hon. Gentleman could hardly be aware of all that was going on, or of the extent to which the companies failed to perform the conditions of the subsidies. The Cunard Company was receiving an annual subsidy of £173,000. He would not say a word in disparagement of that Company; they had performed the service right well in times past. It was stated in evidence before the Committee that for twenty years the Cunard boats had navigated the stormy North Atlantic without a single accident either to the passengers or the mails. But he could not shut his eyes to two ugly facts connected with that Company. First, it had always represented that the large Government subsidy was required to enable it to run the expensive paddlewheel steamers that were better adapted for the mail service than the screw boats; and this reason had been constantly admitted by the Treasury. Secondly, it had always stated that, without the subsidy, it could not afford to go on building the large vessels required to keep pace with the demands of the public and the requirements of the times. Such were the reasons given for keeping up the grant; but at present the Company was acting neither on one nor the other. Sir Samuel Cunard stated that the service could not be performed by screw-steamers. Yet the Australasian, that sailed from Liverpool on the previous Saturday, was a screw-vessel; the Jura and the China were both screw-steamers; and the Company had offered for sale the Niagara and the Arabia, which were both paddlewheel boats. In fact, the Company was preparing to adopt the screw system; it was gradually selling off its wheel-steamers, and substituting the screw-boats it had always represented as unfit for the service. As to the other reason it gave for continuing the subsidy, that it was required to enable it to build a sufficient number of new and large vessels—was the Company observing that condition? Why, of the eight Cunard steamers employed in the mail service, four were 13 years, and two more than 11 years old. In the nine years since 1852, the Company had only built one new steamer. In the same period the unsubsidized Liverpool and New York Line had built eight, the Hamburg Company five, and the Bremen Company two. It came to this, that every unsubsidized Company had built more new vessels than the Company to which the Government paid £173,000 annually in order that it might be able to build them. The other subsidized Line was the Galway Company. He was sorry he could not speak of it with the same respect as of the Cunard Company. That was substantial; and though it had been paid a great deal of money it had done good service for it. But he believed the Galway Company had something of the nature of a sham or a hoax. It had obtained a large subsidy of £78,000 annually, on condition of providing a fortnightly communication, commencing with the 26th of June, 1860, and performed in vessels of 2,000 tons and 450 horse power. So far as he had been able to ascertain at that moment, it had not a single vessel that answered the requirements. The Connaught broke down, and the Parana was to take her place. No vessel sailed on the 21st of August. On the 28th of August the Government, for reasons which he could not understand, permitted the Prince Albert to take her place. The Prince Albert made two voyages, but she did not in any way answer the conditions of the contract. The Connaught was burned at sea, and since the 23rd of October there had been no service from Galway. He had heard it rumoured that arrangements were being made to transfer all the business of the Galway Company to Limerick. He hoped some one would be able to state whether the rumour was altogether unfounded or not. He understood there was another proposition for transferring that memorable contract to Canada, as the Canadian Government wished to obtain a line. There had been an amount of jobbing about the Galway contract that had stirred up the greatest indignation in the commercial community, and he hoped the Government would not sanction any transfer of the agreement. He wished to ask the Chancellor of the Exchequer, What means there were of compelling the Company to act up to its contract, and what money the Company—if it existed—had received from the public purse? what reasons had induced the Government to take the extraordinary step of extending the contract with a Company that had no ships from June to March? and, lastly, whether it was prepared to accede to the prayer of a memorial from merchants trading between this country and America that the contract be annulled?


said, he wished to say a few words on this subject. The general question as to the propriety in the abstract of abolishing these contracts was too large a one for him to enter on, though he might remark that the arguments which the hon. Gentleman brought forward tended rather in favour of some port in Ireland than Liverpool as the port of departure. The hon. Gentleman showed clearly that subsidies had not prevented competition, because he stated that the service across the Atlantic was carried on by ten lines, of which only one was subsidised, and that one of the unsubsidised lines carried more passengers than the one that was subsidised. Since the Galway contract had been entered into the Cunard Line found it worth their while to call at a port in Ireland, which they had never done before, subsidy in this case giving the people of Ireland the benefit of two lines. The mode in which Cunard's Company carried on the service required no praise from him; and with regard to the other line, which more immediately concerned him, he must declare that it was a reality, and not a sham. The hon. Member said that since the Galway Line had been in operation no vessel belonging to what was called the Galway Company of the requisite tonnage had gone across the Atlantic. Now, that statement required some explanation. I; would be remembered that the contract was entered into in the month of April, but it was not ratified by Parliament till the 9th of August. Since then the vessels of the Company had crossed the Atlantic; and the Prince Albert, one of the Company's ships, had made the quickest passage across that ever was known. She had made it in six days; and news brought by ships from America had been anticipated by vessels of the Galway Company which started subsequently to them. Thus it was shown that some advantage was gained for the public by the direct communication with America through Ireland. It was true that since the contract was signed the Connaught was the only vessel of the required tonnage that the Company had started, and she was unfortunately lost after her first voyage. It was said that the Company ought to have had the proper number of vessels; but he hoped the House would take into account the circumstances in which the Company had been placed. Rumours were freely circulated to the disadvantage of the Company, and many of the shareholders in consequence declined to pay their calls, the result of which was that the directors were reduced to such straits that they were unable to get their vessels ready. Then he must say, with all respect to the Government, that the delay and vacillation they had shown in deciding on the claims of the Company exercised an unfavourable influence on their affairs. It was true that more recently they had been treated with considerable for bearance by the Admiralty and by the Postmaster General; but he would venture to say it was not more than the Company was entitled to He would not detain the House further, except to say that he should be glad to receive a direct assurance from the Chancellor of the Exchequer that the hon. Member's observations respecting the transfer of the Galway Company's packet service from one station to another were as devoid of foundation, as he believed they were, and he could not suppose that Government would sanction such a transaction.


said, that as the hon. Member for Montrose (Mr. Baxter) had alluded to the future circumstances of the Galway Company, he would read a communication which had been put in his hand a short time ago, but which he begged the House to take as coming from the directors of the Company, and not from himself. The House was aware that one boat, the Connaught, built at very considerable expense in accordance with the contract, had been already lost. The document he had just referred to stated that two more of the Company's ships would be tried in the course of a few days by the Government surveyors, that the Company were on the eve of completing the purchase of two large ships, and that this fleet of four ships would be amply sufficient to carry out the postal service contracted for; and that another ship, launched some time back, had the greatest part of the machinery on board, and was rapidly approaching completion. According to this statement, it appeared that three of the Company's ships would be ready almost directly, being two more than had been constructed, as the hon. Gentleman had admitted by the great Cunard Company in the space of seven years. He did not understand the purpose of the hon. Gentleman's observations, unless it was to induce the Government to be inexorable in-refusing to prolong the time for getting the vessels ready to perform the contract. The Postmaster-General, acting with the best motives, had given a suspension of time until the 26th of March, and he was informed that these vessels would then cross the Atlantic and perform the service regularly. He was surprised that the hon. Member should have made such an attack, considering that for fourteen months the matter of the contract was kept in suspense, and the operations of the Company completely paralysed by the ambiguous attitude of the Government and the House of Commons. It was found impossible to get the shareholders to pay up their calls, and the shipbuilders had no great confidence in a Board which rested on such insecure foundations. He would not ask the Chancellor of the Exchequer for a further prolongation of the time, but he thought the Government had exercised a wise discretion in the indulgence they had granted.


My part, Sir, on this occasion is a very simple one. I shall not enter at all into a discussion of the general principles which ought to govern the conduct of Administrations and Parliaments with respect to this matter of mail contracts. In the clear statement of the views of the hon. Member for Montrose (Mr. Baxter) on that subject I quite agree, and on those principles we have acted since we have been in office. Passing from that subject, I shall also be very brief in what I have to say with respect to the Cunard contract, for I am not aware that there has been any case made out to warrant the interference of the Government. At the Treasury we have no direct and standing cognizance of these contracts. They are brought under our notice only when anything of a special character occurs to cause an appeal to us from the Postmaster General. Now, my hon. Friend asks what steps the Government are prepared to take with the view of compelling Sir Samuel Cunard to act up to his agreement or to accept a smaller subsidy; and in reply to that question, without seeking to question or contradict any statement which my hon. Friend has made on this subject, I would refer him to the Report of the Post Office Department, which says:— That the Cunard packet service is being performed in a very satisfactory manner; that the vessels employed in it greatly exceed the power required by the contract, and that they arrive and take their departure with great regularity. That is the information, and the only information, of which I am in possession on the point. My hon. Friend also asks what sum of money has been already paid to the Galway Company, and I may inform him that although I am not at this moment in a position to state the precise amount, yet that for the small number of voyages which have been performed the payments of the Company have been made under the rules of the contract, subject to some deductions which in certain cases were stipulated for by the instrument itself. The precise sum paid can be stated, but as I was not aware that this inquiry would be addressed to me I have not the figures now at hand. My hon. Friend next asks why the Company was allowed an extension of time for the performance of the contract, from June until the 26th of March. I do not think the Government is at all open to animadversion for having hesitated in the matter. The very first step taken by the present Treasury Board on its accession to office was to move for the appointment of a Committee to investigate the whole transaction. That Committee was appointed. The Government at once acted on its Report, and made a proposition to the House in conformity with their views as to the course which ought to be adopted. I do not think, therefore, that we have done, or so far as I know omitted to do, anything which can fairly be held to render us responsible for the great inconvenience by which this case is characterized. Without, however, entering into any controversy on the subject, I may venture to tell my hon. Friend how we felt it to be our duty to act. We did not think the engagement one which was wise or politic; but we found the contract in existence, and after the decision at which the Committee arrived with respect to it, we deemed it right to ask Parliament for the necessary money, and it was granted. The engagement then became permanent and absolute, and we thought ourselves bound to extend to the Company every indulgence to which, under the most liberal view of the contract, they could lay claim, quite irrespective of any objections to the original arrangement which we might entertain. Indeed, I do not think it would have been fair on our part to have excluded from our consideration the fact that much inconvenience had resulted to the Company from the delay which had inevitably taken place before the mind of Parliament on the question could be fully and formally declared. We thought it, in short, but just to look at the whole facts of the case, and it was after those facts were calmly weighed that the various indulgences which they received were accorded to the Company. Some of these indulgences relate, as my hon. Friend has stated, to the use of particular vessels which did not, strictly speaking, come within the terms of the contract, but as regards the broader facts of the case what occurred was this.—The Company on the 25th of October made a proposal to the Government to the effect that the service should he only monthly till the 12th of March, 1861, and that then a fortnightly service should commence. My noble Friend the Postmaster General informed me that he had stated to the Company he would accede to this arrangement only on certain conditions, and that it was not for some time that he learnt whether the Company would or would not be prepared to comply with those conditions. On the 7th of November, however, the Company, not finding themselves able to accede to them, made the request to my noble Friend to have the contract placed altogether in abeyance until the 26th of March. That application—and the demand was, I must admit, a very large one to make-was taken into consideration by the Government, and we thought it, upon the whole, our duty to grant it upon certain conditions laid down by the Postmaster General, He informed the Company that the required delay would he accorded provided they forthwith executed an agreement stipulating that if they wore not prepared to carry on the service at the period named, and otherwise to fulfil the conditions set forth, then the contract was to terminate without any claim on their part to damages. The Company took some time to reply to those propositions, but on the 24th of January they did execute an agreement by which they have undertaken to despatch packets on the line in question on and after the 26th of March. With respect to the means at the command of the Company for the purpose of fulfilling their engagements, I have no other in-formation than that received from the Post Office, which states those means to be considerable. Having made these observations, the House will, I think, concur with me in the opinion that it is better I should refrain from any remarks of a prospective character, avoid referring to hypothetic cases, and thus obviate the danger of giving expression to anything which may lead to misunderstanding. My hon. Friend, however, having stated in the course of his speech that he had heard various rumours with respect to the change of the port of departure, and the transference of the rights of the Company of which I am speaking to another, I deem it right to say that I am in entire ignorance of the existence of these rumours, and that, as far as I know, no such steps as those to which he has referred have been taken or even thought of by the Government. I looked with great jealousy upon a proposal which was made shortly after I acceded to office for the transfer of a contract of this kind. I declined, on the part of the Government, to accede to that proposal; nor can I conceive any circumstances which would be likely to induce the Government to sanction such a transaction. I could, of course, enter into no positive engagement on a matter of the sort without having the particular case fully before me; but I should certainly be disposed to view it primâ facie in a spirit of disapproval.