HC Deb 09 June 1873 vol 216 cc686-711
THE CHANCELLOR OF THE EXCHEQUER,

in moving— That the Contract for the Conveyance of Mails between the Cape of Good. Hope and. Zanzibar with the Union Steam Ship Company be approved, said, that on the part of the Government, he having taken upon himself the responsibility of the proposed step, he found himself in a difficulty, for he thought the proper course would have been that those who objected to the contract should first be heard, and that the Government should not be put upon its defence without being apprised of the grounds of the objection. He could not help feeling also that it was most desirable that the responsibility of these matters should rest with the Government, who made the contracts, and not with the House of Commons, who had power to reject them. The effect of the matter coming into the hands of the House, instead of those of the Government, would raise a tendency to produce that which was condemned in other countries—the personal solicitation of Members in the lobbies, which he should be sorry to see adopted in this country; and, further, the fact of the Government not having power to make a binding contract would tend to increase very much the expense, because persons who entered into contracts with the Government, not knowing whether the House of Commons would accept them or not, would naturally exact higher terms than if left in the hands of the Government. The House were, therefore, now asked to come to an important decision. Of course, if the Government were guilty of misconduct, or acted with unfairness, or from a sinister motive, a contract should be set aside; but the House should not stop there, but should set aside the Government as well as the contract. Having made these prefatory remarks, he would now pass to the facts of the case. During 1870–1 the attention of the Government was much drawn to the question of the East African Slave Trade, which was then in a flourishing and not decreasing condition, and the Government came to the conclusion, that the best way to put down that traffic was not by armed force, but by more pacific means. Accordingly, they had been at considerable expense in putting it down, and had spent within five years upwards of £250,000 in the attempt to do so. As cruisers were the only available means of putting it down, a Committee of the House had recommended a large increase of our armed force; but the Government were of opinion that it would be better to adopt more simple measures; that the great antidote to the slave trade was to let in light upon the transaction, and that a still more effectual rival to the slave trade was the introduction of trade and commerce. With that view, the Government considered it desirable to establish a line of steamers from Aden to Zanzibar, and another from Zanzibar to the Cape of Good Hope. In the latter part of 1871, he made inquiries as to the terms on which that could be done, and was informed that two Companies would be willing to undertake the service. The enterprise was one of con- siderable hazard, the route having been badly surveyed; and he thought the survey of this line was likely to give more benefit than that by any expedition to the North Pole. The Government took time to consider the matter, and to ascertain what contributions could be obtained from India and other parts interested in the matter. They eventually received proposals from the British India Steam Packet Company and the Union Steam Packet Company, which offered to reduce the number of days' passage from 37 to 30, on consideration of their contract being extended by the term of three and a half years. Eventually, the Government agreed to give the British India Steam Company £10,000 for the service from Aden to Zanzibar, instead of their original proposal of £11,000; while, with regard to the Union Company it was agreed that if they reduced the length of the journey between England and the Cape from 37 to 30 days they would have an extension of their contract for three and a-half years in addition to the four and a-half years it had to run at £26,000 a-year instead of £29,000 and £15,000, for carrying the mails between Zanzibar and the Cape. The request that the service should be fortnightly and only 30 days in length had been complied with, and the wishes of the Cape Colony had been so far satisfied. But the Government had been charged with favouring monopolies and refusing to put the contract up to open competition. That, however, could not be done, because the Cape Company's contract was unexpired, and he held in his hand a letter from Mr. Hamilton, one of the directors of the Company, detailing an interview with Mr. Donald Currie, representing the competing line, in the course of which he proposed a combination to raise the freights and fares on the plea of the rise in the price of coal, and divide the traffic. Failing in that endeavour, an agitation was commenced against the Cape Line. The House had been deluged with letters from the agent of Mr. Currie, a Mr. Soper, and he held in his hand one, dated the 7th of June, to which he wished to call particular attention, as it showed the kind of statements which were made on this subject. That gentleman stated, among other things, that the Chancellor of the Exchequer had extended the contract for eight years, although it had three and a-half years to run; but the fact was, as he had shown, the contract was extended only for three and a-half years, and it had been made professedly and avowedly to put clown the slave trade. Well, in the beginning of the year, in accordance with that contract, the Union Steamship Company had gone to considerable expense in laying down several large ships, and they actually commenced running on the Line between Aden and Zanzibar. It was urged that that Line should not have been brought into operation until the opinion of the House had been taken on the subject. As to the Cape line, no harm had been done, because the House would not be asked to confirm the contract; but as to the line between the Cape and Zanzibar, it appeared very desirable for the suppression of the slave trade, judging from the disclosures made on the subject, by Dr. Livingstone, Mr. Stanley, and the expedition of Sir Bartle Frere, to bring the contract into operation at once; and he had no doubt that the House would agree with the view which the Government took of this matter. Though the Government felt obliged to abandon the line to the Cape they had not the least intention of abandoning the Zanzibar contract. The Company had acted with a great deal of public spirit in undertaking an enterprise exceedingly difficult and perfectly novel, in which nothing was certain except that their loss must be heavy in consequence of the absence of passengers and commerce. The House would not have approved the action of the Government, if it fell back on the technical defence, and said that these two contracts were contained in two different pieces of paper; and, therefore, though they did not choose to ask the House to confirm the contract between England and the Cape, they require still the Company to adhere to the very low terms they had accepted for the contract between the Cape and Zanzibar. No Government could do such a thing, and they re-opened the contract with the full consent of the Post Office. On the 22nd of November, 1871, before any proposal was made of the service between England and the Cape, the Company offered to perform the service between the Cape and Zanzibar for £29,000. The Government obtained a reduction to £26,000, which was about 8s. a-mile, or nearly the same rate as the Peninsular and Oriental ran at where there was a large commerce and many passengers. If the Government pressed the matter, they might perhaps have got the Company to accept lower terms; but the House would see that in acting as they had done, the Government were only supporting the honour and good faith of the country. The question remained for the House whether they would confirm the contract or not, and he could not allow himself to doubt, after the full statement which he had made, that every consideration of justice and policy would lead them to do it. In conclusion, he would beg to move that the contract be approved.

Motion made and Question proposed, That the Contract for the conveyance of Mails between the Cape of Good Hope and Zanzibar with the Union Steam Ship Company be approved."—(Mr. Chancellor of the Exchequer.)

MR. HOLMS*

I should have been glad, Sir, if it had not fallen to my lot to oppose the Motion of the right hon. Gentleman. I have done all that lay in my power to warn the right hon. Gentleman against the presentation to this House of the contract now under discussion in its present form. There are occasions, Sir, in the life of every right thinking man when a great conflict arises within him between charity and duty, and this to me is one of those occasions. I have had such a conflict with respect to the course which I should pursue as to this Motion, and I have decided that it is my duty, not only to the public, but also to this House and to myself, knowing the facts of this case as I do, unhesitatingly to place them before you. I may perhaps require to ask some indulgence from the House, because apart from the remarkable circumstances connected with the negotiations which have taken place in relation to this contract, it involves two important principles. Should the House of Commons affirm this contract, then it will sanction the principle that such contracts may be concluded by private arrangement, and without being submitted to public competition. It will also approve this other principle—namely, that such contracts may be made without consultation with our Colonies, who are even more immediately and directly interested in such a bargain than the Home Government. I wish here to say that, as I must, when relating in detail the facts connected with this contract, refer frequently to the Union Steamship Company, which for a long series of years has carried the mails between Southampton and the Cape of Good Hope, I desire at once to state that that Company, I believe has fulfilled its duties in relation to past and existing contracts in a most satisfactory manner, and I believe also that it is a Company which is very much respected in the Cape Colony; and for myself I would add that having carefully investigated their various transactions with the Government, I can come to no other conclusion than that its directors are worthy of great praise for their businesslike capacity. Indeed, I only wish that something more of this quality had been exhibited on the part of those who have negotiated these several bargains with them on the part of the State. I also desire at this point to say that I cannot, and do not, regard the blunder of a Department in a matter of this kind as an error to be charged against Her Majesty's Government generally, nor do I think that when one undertakes to make statements such as I shall have to make before I sit down, they should be made otherwise than in the most frank and direct manner, so that those who ought really to bear the blame may have it fairly brought home to them, and have an opportunity of pointing out any errors—should any such appear in these statements.

Now, Sir, the reason I have for opposing this contract, apart from the fact that it has been entered into by private arrangement and not by public competition, is that it proposes to increase the subsidy by £11,000 a-year beyond the sum agreed upon to be paid for the same services under the contract, dated the 19th of December last, which it has displaced, and by which the Union Steamship Company were to have had £15,000 a-year for carrying the mails between Zanzibar and the Cape of Good Hope. By the one now under discussion, it is proposed to give them a subsidy of £26,000. The reason assigned for this addition is that owing to the dissatisfaction expressed by the Cape merchants and Cape colonists against the proposed extension of the existing contract with the Union Steamship Company, for conveying the mails between the United Kingdom and the Cape—a proposed extension from 1876 to 1881, which was embodied in a contract also dated the 19th of December last, and which was withdrawn from the Table of the House on the 5th of May. Now, Sir, the negotiation of that contract, the life and death of which is urged as a plea for this increased payment of £11,000 a-year, was a great blunder—a blunder for which the right hon. Gentleman the Chancellor of the Exchequer was directly responsible—and the plain question now before us is this, is the House of Commons prepared to consent to the payment of £11,000 a-year for eight years, that is to say, of a gross sum of £88,000 sterling, in order to cover the retreat of the right hon. Gentleman from a bargain which he ought never to have made? Having made this strong statement, I feel I am bound to show that this proposed payment of £88,000 is to be given for this object, and for this object alone. To establish this assertion, the House may very reasonably ask me to prove that the payment of £15,000, as proposed by the first contract agreed upon for conveying the mails between Zanzibar and the Cape was in itself sufficient. I propose to do this in several ways. First, I would point out to the House that these mail contracts have all had their origin in the proposed establishment of a mail service for the purpose of aiding in suppressing the slave trade on the east coast of Africa. To this end it was thought wise to arrange that steamers should be run from Aden to Zanzibar, and from Zanzibar to the Cape of Good Hope. Some time before the suppression of the slave trade was spoken of, Her Majesty's Government had had applications from two Companies in relation to the conveyance of these mails. One dated the 22nd of November, 1871, from the Union Steamship Company—and here I would beg the close attention of the House for a few minutes, as the facts I am now about to state have an important bearing on the case—offering to carry mails from Zanzibar to the Cape, once each alternate month, for the sum of £18,000 a-year, or once a month for £29,000 a-year for a period of seven years. The other offer was from the British Indian Steam Navigation Company, who proposed to carry the mails from Zanzibar to the Cape, not for £29,000 a-year, but for £16,315, or a little more than half the sum proposed by the Union Steamship Company. But, besides, the British Indian Company offered to carry the mails from Zanzibar and Aden for £11,050, and their combined offer was evidently in the opinion of the Government the only one at that time worthy of consideration, for on the 10th of January, 1872, Lord Kimberley wrote a despatch to the Governor of the Cape, giving the particulars of this offer of the British Indian Company, and asking the colony if it was inclined to give a subsidy of £4,500 in aid of the contract. How brought about the House will judge now from the following extract from a letter to me from the British Indian Steam Navigation Company, June 2, 1873:— We put our proposal before the Post Office authorities in London prior to December, 1871; and we also had a favourable reply before December, 1871. The Post Office, London, no doubt sent on the proposal to Lord Kimberley, and thereupon he sent his despatch to the Cape. The conditions of this service as to speed, size of vessel, &c., were the same as have been arranged under contracts now made, and our offer was based on a rate of 5s. per nautical mile. It was subsequent to tins that a director of the Union Steamship Company came to us and said that he had beard of our correspondence, and. that they would be glad to meet us at the Cape or Natal—indifferent which. We agreed. Subsequently he suggested that they might do the part between the Cape, and either Delagoa Bay or Mozambique or Zanzibar. Finally we agreed on Zanzibar, and on hearing that another firm had sent in an offer to do the service from Aden to the Cape for £25,000, we agreed to modify our joint tender to that amount, he at £10,000 from Aden to Zanzibar, the Union Company thence to the Cape at£15,000. Then, subsequently to this, on the 25th of June, 1872, these two Companies, the British Indian and the Union, entered into an arrangement for a joint contract for carrying the mails from Aden to the Cape for £25,000 per annum. The British Indian made some slight reduction from their original proposal of £11,500 for the voyage between Aden and Zanzibar, and proposed to take instead £10,000. The Union Steamship Company also made a slight reduction from the offer of the British Indian Company for carrying the mails from Zanzibar to the Cape, and agreed to take £15,000 instead of £16,315. This joint tender was offered to Her Majesty's Government, as will be seen from the printed Papers which I moved for, and which are now in the hands of hon. Members. There was no stipulation in it whatever in relation to an extension of the contract held by the Union Steamship Company, for carrying the mails between the United Kingdom and the Cape. To the surprise of the British Indian Steam Navigation Company, they were asked, however, in the month of August, to have their contract drawn up separately, which was done, and for a period of 10 years. These discussions have revealed to them and to the public that the object of this was to enable the Union Steamship Company to go and have some private bargaining on their own account, which they did, by giving off two years from the 10 proposed under the Zanzibar and Cape contract—a new and untried service—to obtain the extension of their Cape and Southampton contract for three years and a-half. If the statement which I have thus made has been followed and understood by hon. Members, they will at once perceive that £15,000 was an ample payment to the Union Steamship Company for the services which the right hon. Gentleman the Chancellor of the Exchequer proposes to give them—£26,000 a-year. But I go further. The distance between Zanzibar and the Cape is 2,500 miles; from Zanzibar to Natal is 1,660 miles, and from Natal to the Cape 840 miles. The British Indian Company offered to carry the mails from Zanzibar to Natal for £10,800, and from Natal to the Cape for £5,400. Now, inasmuch as the Union Steamship Company not only run steamships every month regularly between the Cape and Natal without any Post Office subsidy from Her Majesty's Treasury whatever, and as the trade between these places is growing so rapidly, that they propose to put on an additional steamer a month, they could clearly afford to perform this service at a lower rate than the British Indian Company, who have no steamers running on any portion of the line. To put this beyond a doubt, I will read to the House a short extract from the last report of the Directors of the Union Steamship Company, dated 8th October, 1872. They say— The Commercial prosperity of the Cape and Natal colonies continues to increase. To accommodate the growing commerce of Natal, the Directors have decided on placing a second steamer on the Coast station, which will give two sailings a month to that port instead of one. This Company, moreover, receives a subsidy from the Government of Natal of £2,000 a-year, with the prospect of its being increased. Under these circumstances it is perfectly obvious that, without any subsidy whatever, the Union Steamship Company could carry the mails between these two ports, and it follows that they could easily have accepted the £10, 800—the sum fixed upon by the British Indian Company for carrying the mails from Zanzibar to Natal—for the service for the whole distance between Zanzibar and the Cape of Good Hope. I am of opinion, therefore, that even by private arrangement the Union Steamship Company might have been induced to accept of the £10,800, instead even of the £15,000. In truth, Sir, this is the position—if we wished to see a line of omnibuses from the Mansion House to Hammersmith, surely that company which already had a successful line established from the Mansion House to Charing Cross would be able to undertake to run the whole distance for a lower subsidy than the company which had no connection with the line whatever. But, Sir, the Union Steamship Company profess themselves to be satisfied with the subsidy of £15,000 a-year, for in a letter dated the 20th of February last just one day after the contracts load been placed upon the Table of this House—that is, the contracts which have both been withdrawn —the Chairman of the Company, addressing the shareholders and friends of the Company, in the manner of an impartial father, desires that both contracts should receive their support, and thus speaks of the Zanzibar contract— It is not disputed that the Zanzibar service has been undertaken on very moderate terms—namely, £15,000 per annum. The Company is prepared to face a loss at the commencement, but this contract is based on the expectation that the facilities afforded would develop trade on the Eastern Coast of Africa, and render the latter part of the term remunerative. Moreover, it is expected that it will act as a feeder to the main line, and each tender was approved on its own merits. Surely, Sir, this establishes beyond the shadow of a doubt the position I have assumed; that under this contract a subsidy of £15,000 a-year was an ample and sufficient payment. I claim that I have already proved my case; but I go further, and I say we cannot tell what the market price is for the service proposed from Zanzibar to the Cape, as until we have submitted the contract to public competition we have no idea at what price we can get it done. I hold in my hand at the present moment a letter from one leading shipping firm in the City, who are in every way capable of carrying out what they undertake, and in this letter they state that they are willing if invited by public advertisement, to tender to carry not only the Zanzibar mails for a less sum, but also that they are prepared to accept of a contract for a much shorter period, and this is a matter of even greater importance to the public than the saving of a few hundreds a-year on the first price. I ask the House to resist the proposed extra payment of £11,000 a-year, making in all £36,000 a-year for the same services which two companies have already most willingly offered to undertake for a payment of £25,000 a-year; because the £88,000 we have been asked to vote by the right hon. Gentleman the Chancellor of the Exchequer, it must be distinctly understood, is to be paid away in instalments of £11,000 a-year in order to cover his own blunder.

But I have more to charge against the right hon. Gentleman. Along with the contract now being discussed hon. Members will find a printed letter, dated the 7th May last—a letter which, if I were not speaking in this House, I would characterize by very strong language indeed; but while in my place here I will simply say of it that it appears to me to be a most disgraceful production. It cannot be excused on the plea of having been written in haste, because the right hon. Gentleman knows more, or ought to know more, than any other man about this question. Now, if hon. Members will look at this letter they will find that towards the end of it the Post Office authorities are instructed by the right hon. Gentleman to conclude a contract, with as little delay as pos-sible— For a mail service similar to that already agreed upon, for a sum not exceeding £26,000 a-year, which my Lords understand the directors will be willing to accept, and which is £3,000 a-year less than the original offer to the Secretary of the Post Office for this service, which was for a sum of £29,000 for twelve trips a-year each way, whilst the Company now under- took for a less sum to make thirteen trips each way. Now, if this statement means anything it means this, that the Company was going to get by the contract now on the Table of the House £3,000 less than it was likely to have before accepted, and to give 13 in place of 12 sailings in the 12 months. Now, this old offer had been dug up and trotted out for the purpose of giving some colour to the extraordinary proposal to pay £26,000 a-year, although I think I have made it clear to the House that when this offer was made by the Union Steamship Company it was at once dismissed and laid aside, and the tender made by the British Indian Steamship Company negotiated upon because it was so much lower. I ask, in the name of common honesty, if it is fair to the House of Commons—is it fair to the taxpayers of this country—to have a statement so calculated to mislead us stuck at the end of a letter dated from Her Majesty's Treasury Chambers, and issued under the sanction of the right hon. Gentleman himself, who must know so thoroughly the whole facts of the case, having studied them since 1870. The right hon. Gentleman has used a word which I hope never again to hear within these walls, and he has set a very bad example in introducing such a word, the word "lobbying." This would give the public to understand that hon. Members of this House had a personal interest in matters of this kind. For myself I know no companies; I only know the public. I throw back to the right hon. Gentleman, then, the word "lobbying," and I hope he will carry it out of the House, never to re-appear here again. But I have something more to say about this letter. At the beginning of the last paragraph the right hon. Gentleman seeks to make the House believe that these contracts were entered upon on the 1st of January last, because there was no reason to believe that the House of Commons would disapprove of them, for he says that this additional sum of £11,000 a-year is to be given because of the Company— Having commenced both services from the 1st of January last, in anticipation that both would receive the approval of Parliament. I do not think it is possible to make a statement more likely to mislead the House than this. Upon what grounds the right hon. Gentleman based this confidence and self-complacency in respect to the approval of this contract I cannot understand. Let the House judge for itself. Immediately the Cape merchants in the City heard some rumours with respect to the proposed extension of the Cape Mail Contract, they at once called a public meeting. They were extremely anxious that the contract expiring in 1876 should not be extended, for they were in hopes that the rate of postage for letters, which had been raised in 1863 from sixpence to one shilling, would be again reduced at the end of the present contract. They held a meeting on the 19th of November; they prepared a memorial, which was signed by over 100 of the leading firms connected with the trade of the Cape colony, protesting against the proposed new arrangement, and which I will read:— Copy of the Memorial of the Cape Merchants to the Lords Commissioners of Her Majesty's Treasury. London, November 23, 1872. To the Right Honourable the Lords Commissioners of Her Majesty's Treasury. The Memorial of the undersigned Merchants and Others interested in the trade between the United Kingdom and the South African Colonies, Sheweth that your Memorialists have learnt with surprise that a new Contract with the Union Steamship Company, for the conveyance of Her Majesty's Mails between the United Kingdom and the South African Colonies has been authorised by your Lordships. Wherefore your Memorialists, believing that the said Contract is opposed to the interests of the Colony, appointed a Deputation, who sought an interview with the Postmaster General, for the purpose of ascertaining the facts of the case, and of representing the views and feelings of the meeting held in the City on the 19th instant; and your Memorialists being unable to obtain the interview they desired, in consequence of the absence from town of the Postmaster General, and having been informed that the proposed Contract had originated in your Lordships' recommendations, feel themselves compelled, by the urgency of the case, to appeal to your Lordships to withhold your sanction to the completion of the same. That your Memorialists have reason to believe that the extension of the Ocean Contract with the Union Steamship Company has been made in connection with a service between the Cape of Good Hope and Zanzibar; and, while sympathizing in the efforts of Her Majesty's Government in taking measures for the suppression of the Slave Trade, they cannot recognize the justice of carrying out an Imperial policy at the expense of the interests of the South African Colonies, and this the more especially seeing that, so far as your Memorialists have been able to learn, no steps were taken, by public advertisements or otherwise, to invite competing offers for this new line between the Cape and Zanzibar. That, considering the recent and probable future improvements in steam navigation, it is undesirable to anticipate the termination, in due course, of the existing Contract. That, looking at the largely-increased correspondence between the United Kingdom and South Africa since the date at which the existing postage rates were instituted, the present state of charges is unduly high. That, in view of the growing importance of the South African Colonies, and the necessity for increased communication with Great Britain, it is in the interest of the Colonies that capital and enterprise should be attracted in that direction; and your Memorialists are satisfied that the proposed extension of the existing Contract with the Union Steamship Company, by giving them a virtual monopoly, will have the effect of repressing private enterprise, which, even under the disadvantages of the present system of postage charges, has supplied the Colonies for the past eleven months with an independent line of steamers, making an average passage to and from the Cape seven to eight days under the Mail Contract time of the Union Steamship Company. That the Cape Colonies having recently obtained responsible Government, it is deeply to be regretted that they should have had no voice in the consideration of the terms of a Contract in which the Colonial interests are so vitally involved. That, for the foregoing and other reasons, your Memorialists respectfully protest against the proposed extension and modifications of the existing postal Contract with the Union Steamship Company, and earnestly pray your Lordships may be pleased to postpone the ratification of the same until an opportunity has been afforded to the South African Colonies of making their opinions known. And your Memorialists will ever pray, &c. They sought an interview with the Postmaster General, and, failing him, they applied to the right hon. Gentleman the Chancellor of the Exchequer himself. That interview took place on the 5th of December, just a fortnight before the contract I am now speaking of was concluded. Now, Sir, this deputation I must confess—for I had the honour of introducing it—did approach the right hon. Gentleman in a most confiding and hopeful spirit, at which I was myself in some measure surprised, but I attributed it to two causes: the first was, that perhaps they felt they were approaching a Gentleman who—whatever he may have been in other walks of life—was, at least in their eyes, a most successful colonist, and therefore inclined to show some brotherly feeling towards them; and, in the second place, they recognized in the right hon. Gentleman the very apostle of open and public competition. They recollected, without doubt, that he was a warm friend of the system of competitive examination, and his replies to deputations seeking Government aid, say for a scientific expedition, must have been fresh in their minds. Public competition and private enterprise they knew the right hon. Gentleman relied upon as the plea for sending all such deputations away empty; and were they not there to urge and encourage him on this path in which he so heartily delights to travel? They concluded, doubtless, that the private bargaining and arrangements which they came to protest against would only require to be named to the right hon. Gentleman to induce him to disapprove and to condemn them; and they were animated with the feeling that the Chancellor of the Exchequer had been imperfectly informed upon the facts of the case, and that once he was really made acquainted with them he would cordially accept of the opportunity which their visit afforded him of getting out of the dilemma in which the Treasury had placed itself, without loss either of time or of dignity. But every bridge over which the right hon. Gentleman might have thus escaped he recklessly kicked down, and he ended the interview by saying that whatever had been done in the matter had been done for the public good; that if the Cape Colonists had paid any portion of the postal subsidy they would have had a better title to be heard; and that as to the question of offering the contract to public competition, that was a fair question to raise, and one he would be prepared to discuss in the House of Commons. Now, after all these efforts of the most public character, and in spite of the most earnest protests against the conclusion of the contract made weeks before it was signed, what defence, I ask, has the right hon. Gentleman to make for sanctioning the extraordinary statement made in this Treasury letter to which I have referred, and which is to the effect that they assumed that both contracts would receive the approval of Parliament. But, Sir, apart from all this agitation against these contracts by those who were so directly interested in them, it appears to me to be a most dangerous and mischievous practice for a Public Department to enter upon contracts on the assumption that Parliament will subsequently approve of them. The case now under discussion affords conclusive evidence of the danger of taking such things for granted, and the sooner that Public Departments are disabused of the idea that they can enter upon such irregular transactions with impunity the better. I will give the House two instances of this—one in relation to each of these contracts. The first refers to the contract for conveying the mails between the United. Kingdom and the Cape. In that proposed extended contract it was stipulated that there were to be three sailings a month. Now, that contract, which was signed on the 19th of December, only received the sanction of the Treasury on the 19th of February, and yet on the 23rd of December these three sailings were announced by the Postmaster General as to commence at the beginning of the year. A copy of this official announcement I now hold in my hand. Now, that contract has never even been submitted for the approval of this House, and never will, for it has been unconditionally withdrawn. I come to the second—to the Zanzibar and Cape contract, also dated the 19th of December. The right hon. Gentleman stated to this House on the 5th of May, when speaking of this contract, that not only had it been entered upon, but a payment had been made out of Her Majesty's Treasury on account of it. Let the House weigh the position. A payment has been made in relation to this new contract which Parliament has never sanctioned, and which it cannot now sanction, because it also has been withdrawn, and if the House to-night should accept of my Motion, as I am persuaded that it will, the Union Steamship Company will have had a payment made on account of a contract which has never even been submitted to this House for approval. The House, I am confident, will join with me in asking from the right hon. Gentleman a full explanation of these irregularities, and also in seeking from him a statement of the authority by which those extraordinary payments have been made which have never been sanctioned by this House. The question, indeed, comes simply to be this; Is the House of Commons prepared to admit that the control which it is supposed to exercise over the expenditure of the public money is a mere sham and not a reality? I have spoken of a great principle that will be sanctioned by this House if this contract be approved—namely, that of making such contracts by private arrangement instead of by open competition, grave evils are sure to ensue, and no better instance can I give than the arrangements with this Company. The Company first undertook to carry the mails from Southampton to the Cape in the year 1857, which contract they obtained by tender in open competition. This contract was for a period of five years; and the second they also obtained by tender, and it was for a period of seven years from 1863; the terms of this last were that they should convey the mails once a month in 38 days, and for this they were to receive a diminishing subsidy, beginning with £25,000 and ending at £15,000; and this latter sum, I understand, is that which was indicated as the amount to be paid for future years. Now began the series of objectionable private arrangements. The first was made 10 months after the last named contract was entered upon, when the Company sought and obtained a commutation of £19,700 a-year, instead of the diminishing sums from £25,000 to £15,000. This £19,700, I take it, was simply the average of the seven years with interest added for the larger amounts, and the advantages of such an arrangement to the Company and to the Government of the day are at once apparent; but its disadvantages, so far as the public interests are concerned, are equally obvious. As regards the Government of the day, it was by this new arrangement called upon to pay on entering upon the contract £19,700 a-year instead of £25,000 and proportionately less to the end. On the other hand, the Company had the advantage of ending with an annual payment of £19,700 instead of £15,000; and as this would extend to the year of notice, which is a year beyond the exact term of contract, they would obtain a payment of £4,700 more than if they had ended with the £15,000. The result of this has been to throw into the coffers of the Union Steamship Company many thousands of pounds which ought to have been saved to the public. The taxpayers of the United Kingdom paid these subsidies when the contract was a losing concern in the expectation that the days would come when it would be recouped to them; but these days, as I will by-and-by show, have been through mismanagement greatly postponed. The next private arrangement proposed by the Union Steamship Company was in the year 1868, just two years before their previous contract was to expire. They then suggested to the Government that as the exigences of the Cape trade demanded it, they would be willing to send two mails a month if the Government would agree privately to give them a new contract for eight years based not upon the payment of a subsidy of £19,700 a-year, but upon the revenue derived from the Ocean and British inland postage — a steadily growing revenue. The Government of that day found that in the year preceding — that is, 1866–7—the amount received for the Cape letters was £16,600, and that if they accepted this offer of the Union Steamship Company they would effect an apparent and immediate saving of £3,100. They altogether failed, however, to look at the question from a business point of view, as the Union Steamship Company had done, and altogether ignored the rapid growth and extension of the Cape trade. They accepted this proposal of the Company in the year 1868, and it will be interesting to the House to know that for the three succeeding years the average receipts of the Union Steamship Company from the Ocean and British inland postage was£21,500; and this result indicates, I take it, that the Company at all events had a very shrewd conception of the nature of the bargain they were making.

Now we come to another private arrangement, which, however, has luckily been knocked on the head. This was the arrangement proposed to be carried out by the contract so wisely withdrawn by the right hon. Gentleman on the 5th of May. On the 10th of January, 1872, the Union Steamship Company made overtures to the Government for a private arrangement, by which their contract was to be again extended to the 1st of January, 1881; and they made this proposal—that the contract should be extended for the period I have named, and that the Company in return would give the following advantages:—First, that they would forego the British inland postage, which was equivalent to a sum of £1,900 per annum, or £6,650 for the unexpired period of three and a-half years which their contract had to run; second, that they would give three sailings a-month, and increase the speed of their ships so as to convey the mails in 30 days instead of 38. Let the House look at these three points—the money, the number of sailings, and the time. In the year 1872, at the beginning of which this proposal was made, the ocean and inland postage which the Company received amounted to £25,482, and showed an increase of £4,000 over the previous year. A revenue like this was certainly well worth keeping hold of for four years and a-half longer in itself by a private bargain; but it was also an important consideration for the Union Steamship Company to have the power of running three steamers a-month in place of two; for let the House note this fact—it was not the Union Steamship Company that was to give three sailings a-month to the Postmaster General, but it was the Postmaster General that was to give the Company power to run three steamers a-month or two as they thought proper. In a word, they were to be allowed three thongs instead of two to their whip, by which they might thrash off their competitors on this line; and the terms of the bargain were such that this Company would have been at liberty after they had succeeded in this in reducing their sailings to two in the month. The effect to the public of such an arrangement as this would have been that whereas now they enjoy four sailings a-month to the Cape, they would probably have had them reduced to two. Now, as to time, 30 days is put forward as a concession on the part of the Union Steamship Company, when the fact is their steamers have run and are now running in 30 days, simply because the ships of a competing line do it in the same time. I think I have made it clear to the House that in these negotiations the interests of the public and of the colonists have invariably been made subservient to the interests of private companies and of individuals, and I would earnestly beseech the House to condemn in an emphatic manner the practice of arranging such important public undertakings in a private manner. Here is a Company which undertakes in the year 1863 to do a certain service to the State by contract; but the conditions of that contract would not have been publicly revised or corrected by the wholesome influence of competition and enterprise until the year 1881 at the earliest, had it not been for the energy and determination of the Cape colonists and Cape merchants in London in opposing the proposed and one-sided private arrangement. Now, Sir, I cannot sit down without alluding shortly to the other principle which I spoke of as being involved in these transactions for the extension of this contract—that they ignore in the most flagrant manner the opinions of our fellow-subjects in the colonies. The people at the Cape of Good Hope throughout these negotiations were never consulted upon the terms of a bargain in which they are obviously so directly interested. We profess to administer the affairs of our colonies with a single eye to the promotion of their best interests, and in the face of this profession there is something positively ludicrous about the contents of a despatch from the Government House at Cape Town dated the 3rd of January, 1873, and which I will take the liberty of reading to this House— (Cape of Good Hope, No. 3.) Governor Sir H. Barkly to Lord Kimberley. Government House, Cape Town, "3rd January, 1873. My Lord,—At the instance of my advisers I have the honour to transmit, for the consideration of Her Majesty's Government, a memorandum representing strongly the injustice which it is considered will be done to the colony by the extension of the contract for carrying the English mails with the Union Steamship Company, at the present heavy rate of 1s. per half-ounce postage without tenders being called for in the usual way. 2. It will be seen from the enclosures to this memorandum, that the action of the Cabinet is founded upon resolutions unanimously passed at special meetings of the Chambers of Commerce of Cape Town and Port Elizabeth, which in turn took their origin in a meeting held in London by merchants and others interested in the Cape trade. 3. At that meeting it was stated that if the contract were thrown open to competition, there was good reason to believe that another company would be prepared to perform the service on the basis of a rate of only 6d., so that your lordship will not be surprised to learn that the rumour that the matter has been already settled by the Postmaster General has been received with universal dissatisfaction out here, for I have not been in a position either to confirm or deny the authenticity of this rumour; having as yet been favoured with no communication on the subject of the new contract. 5. It is true that among the enclosures to your Lordship's despatch of the 19th August, No. 240, respecting the proposed establishment of a line of mail steamers between Aden and the Cape of Good Hope, there is an allusion in a letter from Mr. Stronge of the Treasury to a proposal from the Union Steamship Company, to make certain improvements upon condition of obtaining an extension of their contract by three and a-half years; but the nature of these improvements is not specified, and as no opinion from the Secretary of State for the Colonies was invited either by the Lords of the Treasury or by the Postmaster General, the late Executive Council, before whom that despatch and its enclosures was laid, considered with myself, that it was better to await some more formal notification upon the subject. 6. Trusting that it may not even now be too late to pay attention to the reasonable wishes of Her Majesty's subjects in this colony in the matter.—I have, &c., (Signed) HENRY DARKLY, Governor. The Right Honourable the Earl of Kimberley. Surely this is a most extraordinary position for the Governor of an important colony to be placed in. He is kept in the most absolute ignorance of a matter of vital importance to the welfare of the people over whose affairs he presides. A contract has not only been negotiated and concluded, but actually entered upon, in which the Cape colonists are more immediatly interested than all the world besides, and yet the Governor of that colony, as he himself expresses, has, "as yet been favoured with no communication on the subject of the new contract." And this treatment of the Cape colonists is all the more extraordinary and unaccountable when we recall the circumstance that in Her Majesty's most gracious Speech from the Throne in August, 1872, when proroguing Parliament, the following sentence occurs:— "I have cheerfully given my assent to an Act of the Legislature of the Cape Colony for the establishment in that Colony of what is now generally known as responsible Government." On the 28th of November last, a responsible Government was proclaimed and established at the Cape, and the inhabitants naturally looked forward to more freedom of action, not only with respect to affairs that were peculiarly colonial, but also with regard to interests affecting their relationship with the mother country. Little did they suppose that at that very time when they flattered themselves upon having so far thrown off the trammels of Downing Street, the right hon. Gentleman the Chancellor of the Exchequer was doing his best to bind them with the stoutest of red tape in respect to a matter which was of the very first importance in regard to their future welfare and advancement. This feeling, moreover, could not fail to be intensified by the fact that the very newspapers which announced the establishment of responsible government at the Cape also made this satisfactory statement with respect to the revenue of the colony—that the revenue for the year had reached over a million sterling, while the expenditure fell short of £700,000. How the right hon. Gentleman the Chancellor of the Exchequer, with the facts before him of the rapid progress of the Cape Colony and of its growing commerce and trade, could ever have dreamed of sanctioning the proposed extension of the Cape mail contract I cannot possibly conceive. When the deputation to which I have already referred waited upon him, one of the Cape merchants present offered to furnish the right hon. Gentleman with some information on this point; but he was at once curtly silenced by the remark from the right hon. Gentleman that he already knew all about it. It may be well, however, that the House should know it also, so that hon. Members may judge for themselves what kind of a bargain the Treasury has sanctioned on behalf of the public. It is for the loss of this bargain, let it also be clearly understood, that we are asked to give as compensation this additional £11,000 a-year under the contract now under discussion. The value of the exports and imports of the Cape Colony in the year 1868 was £4,099,000. That was the year when the contract with the Union Steamship Company was entered upon. In 1871 the total value had increased to £5,933,000; and last year—that is, 1872—of all our foreign customers the Cape had increased their purchases from us in a larger ratio than any of the rest. Moreover, the Customs' dues collected in the colony in 1868 were roundly £282,000; last year they amounted to £550,000. With such facts as these in our possession, it is our duty I think, most earnestly to protest against this contemptuous ignoring of the rights and opinions of our colonists as has been manifested in these transactions—transactions in which they have clearly the most direct and immediate interest. There is another point on which I would have liked to say something, and that is the mischief which arises from long contracts; but as this is a question which to discuss fully would occupy much of your time—and I feel that I have trespassed freely upon it—I do not now propose to enter upon it. I will only venture to make this remark, that the frequent alterations made in the Cape mail contracts by private arrangement go to prove the necessity of all such contracts being made for a brief term, if we desire to give the public full advantage of the rapid improvements which take place in steam conveyance, and the growing and extending influence of trade and commerce. I cannot conclude without adding this—that if the sum of £88,000 is to be paid for the blunder committed by the right hon. Gentleman in making this foolish bargain, the Cape colonists and Cape merchants repudiate most earnestly the idea that any of the blame or responsibility rests with them. They protested against the proposed contract as soon as they heard of it, and they protested so loudly and steadily, that they shouted it out of existence. Now I have stated my whole case—imperfectly, I fear—but I will leave the House to judge and decide upon the plain statement I have submitted. I am persuaded the House will feel that I have had to discharge an uncongenial duty. I have, nevertheless, felt it incumbent upon myself to discharge it as a Member of this House. As a Liberal I repudiate these private bargains and arrangements of the right hon. Gentleman when dealing with the money of the public, and I am persuaded also that the Liberals will for themselves repudiate any share in such discreditable doings.

MR. R. N. FOWLER,

in supporting the Amendment, said he would strongly urge the House not to agree to the Resolution of the right hon. Gentleman the Chancellor of the Exchequer.

MR. SAMUDA

said, the House would commit a grave error if it adopted the course urged by the hon. Member for Hackney (Mr. Holms), and got rid of contractors who had served the Government faithfully, and at no exorbitant profit to themselves, in order to negotiate with other parties of whom they had no knowledge whatever.

MR. EASTWICK

took exception to some of the statements of the Chancellor of the Exchequer respecting Mr. Soper and Mr. Currie, and observed that a much more important question than the carrying of the mails was the want of candour and straightforwardness on the part of one of the leading Members of the Government. The question at issue was whether contracts should be thrown open to public competition, or dealt with by private arrangement.

MR. RATHBONE

trusted the House would retain in its hands the power of reviewing mail contracts, by which, according to a Return presented in 1871, no less than £474,000 a-year was unnecessarily lost. This particular contract would, he hoped, not be confirmed. These costly contracts, instead of promoting, tended to cripple commerce.

SIR JOHN LUBBOCK

said, it might be inferred from the statement of the hon. Member for Hackney (Mr. Holms) that the community of Cape merchants were opposed to the contract, whereas some of the principal Cape merchants had expressed to him their entire approval of it. It should be remembered that there was hardly any commerce as yet between the Cape and Zanzibar. It was certainly desirable as a general rule that these contracts should be open to competition, and also that they should be submitted to the House. This however should be done before they were brought into operation; in the present case the Company had been working the contract since January, and the Chancellor of the Exchequer had explained the reasons which induced him to depart from the usual course. To cancel the contract now would, he thought, be unfair to the Company, and would place the country at a disadvantage in future negotiations. Under the circumstances of the case therefore he should vote for the right hon. Gentleman's Resolution.

SIR STAFFORD NORTHCOTE

said, the two contracts stood on a different footing, and the question was why the Government were entering upon this Eastern contract upon which they might have had competition. He wished to point out that the Government had withdrawn from the contract for the west coast service, and had given this contract for the east coast as part of the price for the rescinding of the first contract. In doing that, they had annulled the original contract, which was supposed to be a good one. It was, therefore, fallacious to say that the contract now in dispute had been in operation for some time.

THE CHANCELLOR OF THE EXCHEQUER

said, the hon. Member for Hackney (Mr. Helms) produced a printed paper, which stated that an offer had been made by certain parties to perform this service, which had been described in a despatch from Lord Kimberley to the Governor of the Cape. The Postmaster General knew nothing about that offer, and the statement about Lord Kimberley's despatch had come upon the Treasury bench as a surprise. Under those circumstances, the proper course was to lay the despatch upon the Table, to make inquiry into any offer of this kind that might have been made, and to state the result of that inquiry to the House. If the hon. Member made out his case, he would be entitled to the benefit of it; and if not, then he (the Chancellor of the Exchequer) would be entitled to claim the vote of the House. He begged, therefore, to move the Adjournment of the Debate.

Motion made, and Question proposed, "That the Debate be now adjourned." (Mr. Chancellor of the Exchequer.)

MR. HOLMS

said, he had quoted nothing without being sure that it was authoritative. He had quoted Lord Kimberley's despatch from a colonial newspaper, and lie did not see what the House had to ask for more.

MR. GLADSTONE

said, that his hon. Friend the Member for Hackney (Mr. Holms) had somewhat overstated the information given to the House. The Chancellor of the Exchequer had admitted that it would be his duty to produce an official document which had been referred to, and to ascertain all the circumstances connected with it. There was, however, an important gap waiting to be filled up. This despatch of Lord Kimberley's purported to state that a proposition had been made, but not from whom, or whether it was from a responsible party. There was therefore much which it was necessary for the House to understand, and the proper course was to adjourn the debate.

MR. DISRAELI

said, it did seem most extraordinary that the Government should interfere to adjourn a debate, the paramount importance of which was acknowledged, because they were not provided with a necessary official docu- ment which they ought to have been prepared to produce. During his experience in the House he hardly remembered a case in which flimsier reasons had been alleged in favour of an Adjournment. The House was in possession of all the information which would justify a decision; and if not, the fault lay with the Government, who had chosen their own time and opportunity. There had been a full discussion of the whole subject; but because the Government could not give a satisfactory answer to the charge, they wanted to waste the time of the House; and arrest the Business of the country by adjourning the debate. He should take the opinion of the House against the adjournment of the debate.

MR. BOUVERIE

said, he wished to remind the House that they had no evidence as to the existence of Lord Kimberley's despatch, except an extract from a colonial newspaper. The Government having declared that they had been taken by surprise by a despatch of which the Chancellor of the Exchequer had no knowledge, but which altered the view he took of the case, the House ought not to refuse to adjourn the debate, or to insist upon pronouncing an opinion on this contract. The despatch must be laid on the Table, and to go to a division without it would not only be contrary to the practices and the rules of the House, but a most dangerous precedent. He should, therefore, vote for the adjournment.

MR. GATHORNE HARDY

said, there was one Member of the Government on the Treasury bench—the Under Secretary for the Colonies—who could if he thought fit, give the House some information about that despatch. He saw that right hon. Gentleman in his place; perhaps he would inform them whether the quotation of the hon. Member for Hackney (Mr. Holms) was authentic.

Question put.

The House divided:—Ayes 205; Noes 121: Majority 84.

Debate adjourned till Thursday.