HC Deb 20 March 1868 vol 190 cc2010-20

said, he moved that, in the opinion of this House, no Postal Subsidies in the form of a fixed payment, and not dependent on the number of letters and newspapers carried, should be granted where ordinary traffic supports several lines of passenger steamers, as is the case between this country and the United States of America. The only case in which this Motion, if carried, would have a practical effect, would be that of the postal service between this country and the United States, and the only effect would be to prevent those large payments which were made to the Cunard Company, being continued in the future. He did not mean to say a word against that company, which had in times past performed its duties well, and had fairly earned its original subsidy; but what he complained of was that subsidy had subsisted ten or fifteen years too long, and the British taxpayer had consequently paid at least £1,000,000 too much. The existence of the subsidy had also prevented the cheapening of the ocean postage, as would be seen by the Postmaster General's letter to the Treasury. That letter stated that the postage to America might be reduced from 1s. to 6d. a letter if the Cunard contract could be terminated, and that that contract whilst it continued cost the country £100,000 a year, whereas 6d. a letter would be a self-supporting rate. We had seven powerful competing steam companies, the vessels of three of which were at least as good as the Cunard's. It appeared to him (Mr. Baxter) that people were very much in the habit of sending their letters to America by the Cunard line, because they thought it was the fastest and the most regular; but that, he contended, was a great mistake. The Cunard Company had been recently employing vessels fifteen and eighteen years old, and even lately were using vessels which had not been built for the mail service. Two companies had tendered to take letters at 1s. an oz., and the Cunard Company did not tender. They knew they had friends in the Post Office, and although they did not tender they continued fitting out their ships with sorting rooms for the postal service. They were not mistaken; the Chancellor of the Exchequer found himself in a difficulty, and the Company obtained £80,000 for this year only. His (Mr. Baxter's) object was simply to urge the policy of not extending this arrangement. He did not wish to find fault with the conduct of the Government so far as the present year was concerned. He fully admitted the difficulty in which the right hon. Gentleman the Chancellor of the Exchequer had been placed; but he trusted the policy of not entering into such arrangements in the future would be recognized. He believed that the terms agreed to by the Post Office were not advantageous for the public service. The vessels would keep time if they got no mails at all; and if the Government had been firm they would have obtained a mail three or four times a week merely for the freight of the mail bags. He found that whilst the two Southampton companies and the Inman line were bound to keep time, there was no such condition in the Cunard contract. The Cunard got £80,000, and if the price of coals rose £40,000 more, making £120,000, whilst the other companies would have done the work for £35,000. The disposition which had been so frequently shown to forward the Cunard Company had given rise to some strange suspicions; and he had seen, in an article in a leading American journal, the assertion that it was evident the recent postal arrangement between America and England ought to have been concluded with the Cunard Company, and not with the Post Office, since the interest of that company had been successfully exerted to prevent notice being given of the intention of the Government to terminate the arrangements. Referring to a letter by the Postmaster General on the subject, he stated that it was full of inaccuracies, and contained whole paragraphs pleading the cause of the Cunard Company with as much spirit as if the noble Duke (the Duke of Montrose) had been a shareholder in the company. He called attention to the subject, because he felt that unless some limit was put to the granting of subsidies there would be no end to the demands on the public purse. He urged the Government to accede to his Resolution, which would assimilate our practice in this respect to that which prevailed in America. It would have the effect of putting an end to solicitations for special grants of the public money, and would strengthen the hands of Government in the matter of postal contracts in all time to come.


seconded the Amendment, urging the Chancellor of the Exchequer to take the matter seriously into consideration, and give the assurance asked for by the hon. Member for Montrose.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, no Postal Subsidies in the form of a fixed payment, and not, dependent on the number of letters and newspapers carried, should be granted where ordinary traffic supports several lines of passenger steamers, as is the case between this Country and the United States of America,"—(Mr. Baxter,) —instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."


had no complaint to make of the mode in which the hon. Member for Montrose (Mr. Baxter) had introduced this subject; indeed, he was willing to admit that the hands of the Government were strengthened by its discussion in the House of Commons. The Select Committee on Postal Contracts had stated as their opinion that large subsidies might be dispensed with in future, and it might be said that they had been already dispensed with in the case now under consideration, because the subsidy which had been promised to the Cunard Company for the current year was very small as compared with former subsidies, and from the Estimates made it did not appear to be much in excess of the postal charges of other steam lines. Putting that aside, he reminded the hon. Member that the Committee expressed an opinion that, in all such cases, very much must of necessity be left to the discretion of the Government. Remarks of that kind occurred throughout the whole of their Report, in which they stated that they shrank from tying the hands of the Government by passing express resolutions on the matter. He would urge the hon. Member for Montrose to be satisfied with having stated his views. He assured him not only that views similar to those he had expressed had been taken into consideration in the past, but that due weight would be given to them in the future. He went further, and said that the intention of the Government and Post Office authorities, as the correspondence he had referred to clearly proved, was to put an end to subsidizing lines of steamers, and to establish free trade in the carriage of letters. Referring to another point, he said that no doubt it would be a very desirable thing to have daily postal communication with the United States; but it would be apparent to every one that a daily despatch would be of very little use unless it could be insured that the letters would arrive in the order in which they had been sent. The Government had recently received tenders with a view to obtain four mails a week between this country and America; but one of the tenders was, on the face of it, useless, because the letters which the person making the tender proposed to set out with on a Thursday would not arrive in the United States until after the letters which had been despatched on Friday. There was no use in trying to rest our postal arrangements on principles of Free Trade, unless we had some hold over the companies, and were able to put terms upon them, and make arrangements for the delivery as well as the starting of the mails. That was one of the difficulties which was found very serious by the Government when they endeavoured to carry out the recommendations of the Committee on Postal Contracts, which they have been, and still were, very desirous of giving effect to. At the same time, if a fixed payment could be arranged, which would be no more than a company would actually receive under a Free Trade system, although in one sense a subsidy, it would not be such a subsidy as that to which the Committee on Postal Contracts had very properly objected. He therefore contended that the country was already reaping the advantage of that system. All that he deprecated was that the House should pass a Resolution which would render it impossible for the Government, which had now the experience of those systems working side by side, to take advantage of that experience, and might in them future years render it impracticable for to make even a more beneficial arrangement than that recommended by the Committee. The present system had been in operation only two months and a half, and that was too soon for any statement as to results; but the anticipated increase in the amount of correspondence so far was beginning to be realized, and in the course of a short time it might very possibly turn out that the payments to the Messrs. Cunard would not be so great as what would be received for the sea postage of the letters. That was still an open question. But let it be remembered that the payment was made for this year, and this year only; and the Post Office authorities in dealing with the question for the future would have the advantage not only of experience, but also of competition. He would say, in conclusion, that he hoped the hon. Member would not think it necessary to divide the House on the present occasion.


said, that as Chairman of the Committee on the Postal Service, he was very far from being satisfied with the statement of the Secretary of the Treasury respecting the mode of carrying out their recommendation. Nothing was more clear to the Committee than that the payment of the postage rate for letters was quite ample remuneration for the carriage. There was no necessity whatever for a subsidy, the service might be very well done without any. He hoped they would have some more decided assurance that an end would be put to the system of extravagance and favouritism which the Committee condemned.


said, he hoped that a more distinct assurance would be given by the Government with regard to future contracts. The Secretary to the Treasury met the statement of the Member for Montrose (Mr. Baxter) very fairly as far as he went, but he had told the House nothing specific about the terms of the contract that would have to be entered into at the expiration of the present year, nor did he seem to appreciate the views advanced by the Member for Montrose, which were of great weight, and had been the views of the Treasury and the Post Office for the last ten or eleven years. It was only by the accident of delay that the Post Office found themselves in the position with reference to Messrs. Cunard and Co. that they now occupied. In November, 1857, the Duke of Argyll, who was Postmaster General, proposed to the Treasury to carry out this principle; but in 1858 there was a change of Government, and the Cunard contract was renewed for a period of ten years, which had just expired. In 1866 Lord Stanley of Alderley, then Postmaster General, in conjunction with his hon. Friend the Member for Pontefract (Mr. Childers), then Secretary to the Treasury, agreed to adopt the policy now propounded by the Member for Montrose; and, in a letter dated the 8th of February, the noble Lord expressed the opinion that, if the contract had been allowed to terminate, it was highly probable that instead of an annual loss to the country of £100,000, tenders would have been received from parties willing to carry the mails between this country and New York for the amount of the sea postage, and went on to say— I entertain a hope that if this service be now advertised the tenders for it will show that so large a reduction may be made in its cost as not only to render the service self-supporting, but to make it practicable considerably to reduce the rate of postage to the United States. The Treasury agreed to give notice to terminate the contract, but, on the 26th of April, Lord Stanley of Alderley again wrote, referring to the new postal convention with the United States, and stating that the proposed reduction from 1s. to 6d. per half ounce, which had been approved of by the United States Government would be delayed till the contract with Messrs. Cunard had terminated, owing to the loss which would otherwise fall upon this country. The noble Duke who was now at the head of the Post Office, in July, 1867, after an interval of more than twelve months adopted, the view of his predecessors, and issued conditions of contract upon the basis of their proposals, which also received the assent of the Treasury. But three months afterwards, and within two months of the termination of the contract, the Postmaster General found himself in difficulties, owing to the determination of Messrs. Cunard not to tender for the conveyance of the Saturday mail upon the terms proposed. In a letter of the 24th of October, 1867, the Postmaster General informed the Treasury of the tenders made by certain companies, and that Messrs. Cunard had declined to make one on the prescribed conditions. The Postmaster General said, he presumed that they had declined to do so— In the belief that if they stood aloof any arrangement that might be based on those conditions must break down, and that when it had broken down they would be able to make their own terms with the Department. However, in the same letter, the noble Duke entered into a long calculation to show that the terms proposed by Messrs. Cunard and Co. for a fixed subsidy, would, practically speaking, be a contract as profitable to the public as the payment of them by the ocean postage. But that calculation was based on the hypothesis that the United States would continue to pay the ocean postage on their letters homeward. On the 26th of November the Postmaster General discovered that the United States had been able to make a better bargain than that, and to have the homeward mails and letters carried for less than the ocean postage. The Postmaster General found that this profitable arrangement to the United States would result in a loss to this country of £15,000. He appealed to the good feeling of Cunard and Co., and opened negotiations with them for the purpose of entering into a new contract, beginning by the payment of £75,000 a year—which it was believed would at once be met by the ocean postage—and that it should gradually increase at the rate of 5 per cent until it should amount to £122,000; and it was arranged that it should be a ten years' contract. But, fortunately, the Chancellor of the Exchequer came to the aid of the public and of the Post Office authorities. He put himself in personal communication with Messrs. Cunard, and made a better bargain, by which they arranged to carry the mails for £80,000 for one year, and one year only. The Chancellor of the Exchequer would, perhaps, afford them a clear explanation of the policy they intended to carry out in connection with this new contract entered into with Cunard and Co. He thought the Chancellor of the Exchequer would have some difficulty in showing that the terms which Messrs. Cunard originally preferred so much to ocean postage that they declined to tender if ocean postage terms alone were offered, now that the Postmaster General had fallen back upon them, were both economical and advantageous to the public. He found no fault with the Cunard Company, whose business it was to make the best terms they could for themselves; he was prepared to admit that having placed the Post Office in a difficulty they had behaved handsomely. In accepting the contract on the 3rd of December, Messrs. Cunard wrote— That they had agreed to the exceptional terms adopted to meet the exigencies of the public service, and to relieve the Government from a difficulty which had arisen owing to the American Post Office not having accepted the arrangements proposed by the Government for the carriage of the homeward mails, and which had prevented the Government from completing their agreement for a more permanent service. The Government ought not to have allowed the company to assume such a position as that, and its concession to them might be prejudicial to the public in subsequent negotiations.


did not think there was any real difference of opinion between the Government and the hon. Gentleman who brought forward the Motion. The point taken by the Secretary to the Treasury was that it was undesirable, by the general Resolution proposed, to fetter the Government under all contingencies that might happen. It was a mistake to suppose that sea postage was not a subsidy. A subsidy might be given in the shape of sea postage or an equivalent to sea postage, or it might be in the shape of a sum much exceeding the amount that the sea postage would come to. The hon. Gentleman who brought forward the Motion, and those who supported him, must admit that, in the arrangement made this year, the Government had given up entirely the notion of granting subsidies beyond what the sea postage would come to. He acknowledged that the arrangement was faulty, because it was wrong that the companies carrying mails to America should be under different terms with the Government; and it was only under the circumstance of the moment that this contract was entered into for one year. The Government was in a position of considerable difficulty at the time, because there was no offer made by any company to carry the Saturday mails, by which the mercantile community of the metropolis had been in the habit for many years of sending the greater part of their corre- spondence to America, and they saw no way out of the difficulty, except by making an arrangement with Messrs. Cunard. According to the calculation of the Post Office the sum eventually agreed to be given exceeded by only £1,500 the sea postage they were likely to earn, and it could not, therefore, be contended that, in making this arrangement, the Government were continuing the system of large subsidies condemned by the Committee on Packet and Telegraph Contracts. But the Motion of the hon. Member went far beyond the question of the American contract; for it would apply to any case that might arise where there might be a great amount of British correspondence to be carried, and might fetter seriously the hands of the Government in certain exigencies. The Select Committee, in their report, said it would be impossible to lay down any positive rules. A Royal Commission had recommended the adoption of certain positive limitations; but these failed to obtain the concurrence of successive Governments. The Select Committee said they had reason to believe that the opinions of the Commissioners themselves had been modified by experience, and they felt that very much must be left to the discretion of the Government, to act as they thought best under the circumstances of each case. It would be a great mistake not to follow that advice, and he urged the House to abstain from laying down such definite rules as might fetter the Government to the prejudice of the public service. The object of the Government was to secure for the public a regular, speedy, and efficient postal service, but if it so happened that this could not be obtained upon ordinary principles at a particular moment, were the Government to be precluded from making special arrangements, with a view of obtaining for the public such accommodation as was actually required? In making last year the arrangement for which he was responsible, he had shown no favour for one company or another; but was animated with the single desire to secure for the public on the best terms that which they stood in need of. But he had been told by the Post Office officials that, during the short time this arrangement had been in operation, not one steamer of the company receiving the fixed payment had been caught up by a steamer starting subsequently; but in the case of other companies carrying mails this had frequently happened. Under these circum- stances the House should hesitate before finally deciding that in no case should a contract of this nature be made. The present system had only been in force a little over two months, be that its merits had not yet been fairly tested, and it would be undesirable at that moment to lay down any positive rule with regard to all postal contracts. One company might have very fast vessels, and another very slow ones; and he thought it would be undesirable, where one line was proved to be good and the other very indifferent, to divide our favours equally. He was desirous to see the postal service across the Atlantic self-supporting, and it was in that spirit that future contracts would be entered into; but it would not be advantageous to fetter the hands of the Government by laying down such a rule as that proposed by the hon. Member.


said, to the spirit of the Resolution he had nothing to object; but he must protest against some of the statements of the hon. Member for Montrose as most unfair to the Cunard Company. He (Mr. T. Cave) had crossed the Atlantic three times in the Cunard boats. He did not know the owners, nor was he a shareholder in the company, but when he heard the hon. Member say that the Cunard Company were employing old boats, he could not help replying that they had the finest fleet in the world, that their average passages were quicker than those of the Inman or any other line, and that during twenty-five years not a single passenger had lost his life in these boats. The hon. Member for Montrose had said the letter of the Postmaster General (the Duke of Montrose) was full of inaccuracies, but he had failed to expose one of them. With regard to the feeling in America, he (Mr. T. Cave), from his recent experience in that country, believed it to be in favour of the Cunard line, so far as speed and safety were concerned. The House should remember too, that, owing to the grant of this subsidy, the Government, during the Crimean war, had at its command a magnificent fleet of transports, and which otherwise they would not have possessed. If the hon. Member should press his Amendment to a Division, he should certainly vote against it, if only to mark his sense of the injustice done to the Cunard Company in the opening speech of the hon. Member for Montrose.


said, the Government had no right to shelter them- selves under the plea that they were in a difficulty; for if they did not advertise for tenders till the last moment, they were sure to be in a difficulty. The mails should if possible be self-supporting; and the best way of making them self-supporting was to leave the contract open, and if there was a Division he should support the Amendment.


said, that, as regarded the past, the more convenient course would have been to object to the contract during the month in which, according to the rule of the House, it remained on the table before confirmation; and, looking at the future, it would be unwise to bind the House by an abstract Resolution like that proposed. Under such a Resolution the Government would be debarred from continuing the subsidy to the West Indies, Brazil, Australia, or in fact to any country which had a second line of steam traffic. For this he did not believe the House or the country was prepared. The House might, if it thought fit, increase its power over the Department, and provide that before any contract was signed, and before the Treasury was committed to it, it should come under the review of the House, who would then assume the responsibility of the arrangement. But each case should be dealt with as it arose, and there should be no abstract Resolution.


said, he had listened with pleasure to the remarks of the Chancellor of the Exchequer; for, if he could understand English, there was no essential difference between the view of the right hon. Gentleman and that of the hon. Member for Montrose (Mr. Baxter). After such an assurance, which would no doubt guide the right hon. Gentleman if he should hold office long enough to make any other postal arrangements, the House might rely upon him to act according to the rule he had laid down, and he would also have before him the prevailing sentiment of the House that the policy of the past should be reviewed, and in fact abandoned, and that there should be more regard to economy in entering into these contracts than had prevailed heretofore. The statement of the Chancellor of the Exchequer having been to a great degree satisfactory, he should recommend his hon. Friend to withdraw the Motion.

Amendment, by leave, withdrawn.