HC Deb 04 August 1874 vol 221 cc1307-25
MR. W. H. SMITH

rose to move— That the Contract entered into between the Postmaster General and the Peninsular and Oriental Steam Navigation Company for the conveyance of the East India, China, and Japan mails be approved. The hon. Member said, he regretted having to propose a Motion which an hon. Member (Mr. Rathbone), who had the regard of every Member of that House, felt it his duty to oppose; but nevertheless he (Mr. Smith) hoped he should be able to persuade the House that the proposals of the Government in this matter were just, fair, and reasonable, and to the public advantage. This was not a new contract, but a proposal to modify an existing contract with a Company which had conveyed the mails between England and the East during the last six or seven years, and would continue to do so for a subsidy of £450,000 a-year until the 1st February, 1880. The contract was entered into in 1867, and was modified in 1870 at the instance of the noble Lord the Member for New Radnor (the Marquess of Hartington), who was then the Post-master General. The Government had up to that time been in a sort of partnership with that Company. It had undertaken to pay £400,000 a year, and to contribute a further sum up to £500,000, in order to make the dividend up to 6 per cent if it should not be earned by the Company in its ordinary commercial transactions. It was felt that there were great inconveniences in the association of the Government with a Company in a species of partnership, and a fixed subsidy of £450,000 a-year was consented to in lieu of the then existing arrangement. At that time the Suez Canal was scarcely open; but within the last three or four years there had been a practical transfer of the traffic in passengers and goods from the long sea voyage to the passage through the Canal. In 1873 the Company applied to the Government of the day for permission to pass their vessels through the Canal. They represented the inconvenience of landing their passengers and goods at Suez and embarking them again at Alexandria, and how their interest suffered by the continuance of the stringent provisions of the contract under which they worked. The Post Office expressed their willingness to accept a service which would effect a saving of 14 hours in the transit of mails viâ Brindisi to Bombay, Point de Galle, Hong Kong, and Japan, leaving the service from Bombay exactly as it was under the contract, and suggesting that a further 24 hours should be allowed for the service from Bombay to Southampton, and vice versâ. The Postmaster General required that an abatement should be made from the subsidy of £30,000 a year. The Peninsular and Oriental Company declined the proposal; but offered in return to convey the mails from England to the ports of Bombay, Calcutta, Shanghai, and Yokohama in 24 hours less time than they were bound by their existing arrangement to do. The Post Office would not accede to this proposal, and the reason why no alteration was effected under the late Government seemed to be mainly that the reduction of subsidy to which the Company was willing to submit was not sufficient. When he came to consider the matter, after entering upon his present office, he was inclined at first to take the same view. The Company seemed to have lost a large part of their revenue by the transfer of a portion of their business to other Companies and shipowners, and it was thought that their object was to regain that business by means of a change in the provisions of the mail contract. On making inquiries, however, it was found that the advantage to be gained by the Company would not be so great as had been supposed. In one respect, no doubt, there would be an advantage, inasmuch as the Company would not be obliged, as it seemed it had sometimes been, to land the mails at the port on one side of the Isthmus and pass the steamer as quickly as possible through the Canal, in order that, at the port on other side, she might take up the same mails. The present Government took the matter into consideration, and while he was as anxious as any one to save the public money wherever it was possible to do so, he submitted that the arrange ment which had been entered into was fair and reasonable. There was a subsisting engagement with the Company which would entitle them to come to the Government and say—" We are willing to make such and such terms to the public advantage provided certain conditions be relaxed in our favour." Well, he was of opinion that it would not be for the public benefit that the Company should be put into a position which would be hard on any contractor who endeavoured fairly and honestly to carry out his contract. If it were a new contract, he confessed he would desire to put it up to competition and to alter the terms; but we had now to consider the position in which we found ourselves, and under these circumstances, he submitted to the House that a fair proposal was made. An entirely new trade had sprung up within the last few years, owing, in a great measure, to the fact that the Peninsular and Oriental Company had been excluded by the terms of their contract from the profitable use of the Suez Canal. Those who objected to the contract—and their representations deserved the most serious consideration—had alleged that there was no gain in time, but an absolute loss in the proposal now submitted to the House. But those gentlemen lost sight of the fact that the Post Office under successive Administrations had thought it right and necessary to prescribe certain times of stoppage during the period of the voyage from England to the extreme East, a circumstance which had not been taken into account by the objectors to the new contract. Under different time-tables sanctioned by different Postmasters General for the last six years, there had been stoppages of 24 hours at Aden on the outward voyage, and 20 hours on the homeward, 28 hours at Point de Galle, six hours at Penang, and other stoppages of a similar character, amounting to the difference between the estimate made by hon. Gentlemen of the proper time for the service and the time in which it was to be performed, which would justify his statement that there would be an actual saving of 24 hours on the passage outwards to India and China, and of 40 hours on the passage to Australia. But if the House refused to sanction this proposal, there would be no acceleration of the mails beyond the extent which his right hon. Friend opposite (Mr. Lyon Playfair) endeavoured to secure in Feb ruary last, and which was limited to 10 hours. We should lose the small sum which the Company undertook to surrender from their subsidy of £450,000, and also the great advantage of being able to exact the penalties for delays whether occasioned by stress of weather or any cause other than shipwreck. Under all the circumstances of the case, he did not hesitate to recommend the acceptance of the contract as one fully justified, and as tending largely to the advantage of the mercantile community.

Motion made, and Question proposed, That the Contract entered into between the Postmaster General and the Peninsular and Oriental Steam Navigation Company for the conveyance of the East India, China, and Japan Mails be approved."—(Mr. William Henry Smith.)

MR. RATHBONE,

after presenting a Petition from the Liverpool Chamber of Commerce praying the House not to approve the contract, moved, as an Amendment, that it be not approved this Session. He and those who agreed with him felt no want of confidence in the Secretary to the Treasury; they acknowledged his anxiety for the public purse and his desire for the promotion of trade. The hon. Gentleman had met the representations which had been addressed to him in a candid spirit, he had withdrawn one contract and accepted modifications in another, and the very fact that he had done so showed how necessary it was that when a question of such difficulty, of such wide bearings, and important consequences to the trade of the country was proposed, there should be no undue haste, but that ample time should be given for its consideration. The original contract was made on the 9th of November, 1867, before the Government had time to receive representations on the subject of the great improvidence which was being shown. It was made for 12 years at a period when the greatest improvements were being-effected in the construction of steamers, and when there was every prospect of the mails being carried with increased celerity. When the contract was made the main sources of revenue contemplated by the Company and the Government were the mails and the passengers. The quantity of goods carried was small, but the opening of the Suez Canal made an enormous difference in that respect. It was notorious to everyone acquainted with the shipping trade that if such a contract had to be made now, it would be made at enormously reduced rates. The Company had got largely overpaid for the work. ["No!"] Would the hon. Gentleman who said "No" stake his reputation on the assertion that if this contract were abrogated it would not be taken up at greatly reduced rates? He ventured to think that when the Company asked to be relieved from the stipulations in order to be enabled to compete with private companies, the Government were bound to see that the country should obtain such a reduction in the subsidy as would be equivalent to the relaxation they might grant. If they relaxed the stipulations without reducing the subsidy, the taxpayer would be unfairly burdened and the Company would have a surplus fund which it could use to suppress competition. The Government ought not to hurry through at the end of the Session without sufficient consideration a contract which, while it did not give the public the benefits to which it was entitled, would inflict a great injury on the shipping interest. As to the argument that different Postmasters General under different Governments had all taken the same course, it must be remembered that Postmasters General were often not selected for their great knowledge of mercantile affairs, and were naturally at the mercy of the permanent officials of the Department, whose bias had for years been far too much in 'favour of contractors, and far too little in favour of the public interest. He would illustrate the want of vigilance and care shown on behalf of the public by the case of the West India and Brazil contracts, in respect to which a new contract of a most improvident description was precipitately entered into. A practical man of business had told him that he would have been glad to carry out for £12,000 the service for which the Government had given £32,000. With regard to the manner in which the Peninsular and Oriental Company had done their work, he (Mr. Rathbone) maintained that they could have done it a great better if they had chosen, and that they ought to have gone faster considering the great improvements which had been made in connection with steamboats. They had been beaten in the most extraordinary way by private traders. The private trade were unable to see what were the full bearings of that contract until further time was given for its consideration; and the Government ought not to make a contract and tie it round their necks for another five years and a-half without more carefully going into the subject. Marseilles, Trieste, and similar places had become more than heretofore the centres of trade; and it was only by the enterprise of our active traders that so large a portion of the traffic through the Suez Canal had been retained for this country under great disadvantages. Those men very fairly said that before a contract was made which would enable a large monopoly greatly to injure, if not to ruin them, the Government ought to obtain for the country some commensurate advantage. He hoped the Government would withdraw the contract till next Session, or, at all events, that it would only be allowed to run till the 1st of March, in order to give time to the commercial interest to ascertain its true character and effect. He begged to move that the contract be not confirmed.

MR. ANDRSON

seconded the Amendment. He thought that if any change was to be made in the contract at all it ought to be one in the direction of a reduction of the subsidy. He complained that the conveyance of the mails to India by the Peninsular and Oriental Company took a much longer time than was necessary, and that time could be saved were another Company to be employed. He regarded it as a great misfortune to be tied down by this contract for another six years, because if it were not for such an arrangement, he believed they might even now do without a subsidy. He hoped the Government would not insist upon pressing through this new contract at that late period of the Session.

Amendment proposed, to leave out the word "approved," in order to add the words "not approved this Session,"—(Mr. Rathbone,)—instead thereof.

Question proposed, "That the word 'approved,' stand part of the Question."

MR. SAMUDA

said, he thought that his hon. Friend who brought forward this Motion had not fully appreciated the subject really before the House, and it appeared to him the only course open to them was to accept that which had been recommended by the Secretary of the Treasury. In 1867 a contract was entered into with the Peninsular and Oriental Company, and they were to receive either £400,000 or £500,000 a-year, according to the amount of return they were able to get from the contract they had entered into. If they could obtain a fair return for their capital, they were to be contented by receiving £400,000. If not, they were to be able to draw an extra £100,000 a-year to make up for the deficiency. If they received 6 per cent for their money they were to be contented; if not they were to receive the supplementary sum. After having had the contract for three years they had not been able to get a sum sufficient to relieve the Government from paying the extra £100,000, and the noble Marquess (the Marquess of Hartington), the Postmaster General at the time, made an arrangement in the interests of the public, saying that as he had been compelled to pay £100,000 a-year under the contract, and as there was no prospect of the Government being relieved from paying it, he would make a variation in the contract—namely, that instead of remaining in partnership with the Peninsular and Oriental Company, to share their profits, he would give them a fixed sum of £450,000 a-year, and they should shift for themselves. The country accepted that arrangement, and had since been relieved from paying £50,000 a-year. Instead of there being correctness in the statement of his hon. Friend (Mr. Rathbone) that the subsidy alone was sufficient without either the carriage of the mails or passengers, and that the Company was greatly overpaid, he (Mr. Samuda) wished to point out that the Company had never paid more than 6 per cent from the time they entered into the contract in the year 1867, and that on the last occasion the dividend paid to the shareholders was only 5 per cent. The subsidy was £500,000 a-year, and the earnings of the Company, including the subsidy, varied from £1,500,000 to £2,000,000, and yet they were only able to pay their shareholders £170,000 a-year. It was therefore absurd to say that the subsidy would be sufficient to carry the mail service without cargo or passengers. He wished to call attention to another fact which appeared to be lost sight of—namely, that it was not proposed that any variation should be made in respect of the carriage of the important mails between this country and India. The only alteration suggested had reference to slow or water-borne traffic; but, whether as regarded the fast mails or the slow, the proposal made by the Company would confer a great advantage on the public. It should be borne in mind that the existing contract was one which must last for six years. What was asked was that while the really valuable portion of the service should be carried through Egypt, as it now was, permission should be given to carry the heavy portion of it through the Canal, instead of, as heretofore, by railway. Not a single passenger, however, being prevented from travelling overland if he thought fit to do so. The Company went further, they offered to accelerate the mails and to make concessions in the matter of fines. If they were deprived of the contract after serving the country for 25 years, the result would be that having received only 5 or 6 per cent for their expenditure their property would be depreciated in value to the extent of the dividends they had paid for over 20 years. He could not conceive that any fault could be found with the arrangement that had been made by the Government in this matter. It secured to the public many important advantages, and the Company had acted very disinterestedly in entering into the contract. Their vessels were of the highest character. Indeed, during the last five years they had only lost one vessel out of their entire fleet, and that under the most exceptional circumstances, and this, in his opinion, ought to have a great deal of weight in the view which the House was to take of this question. He certainly did hope the House would not be led away by the statements of those interested in rival trades, and who wished to keep everything in their own hands.

MR. DODSON

said, he had no interest or feeling either for or against the Peninsular and Oriental Company, or any other Steam Packet Company. His only anxiety was that that should be done which was best for the public service. This contract had been prepared with very insufficient attention, and better terms might have been made, as he believed, for the public. There were no fewer than 14 blunders in the contract as originally drafted in July last. They had been corrected; but it was mainly through the instrumentality of rival shipowners, whose interference in these matters had been so much deprecated, that their existence had been brought to the knowledge of the Treasury. There were some points in the amended contract that required attention. Among others, he found it was stated that "96 hours additional" were to be allowed from Bombay to Suez, and from Shanghai to Bombay. To what time were those 96 hours additional? and were they to count twice over on those two voyages? With regard to the acceleration of 24 hours, so far as the contract went, it would be an acceleration that would not involve any increase of the speed of the vessels, as the Company might gain the time by curtailing the stoppages at different ports. With regard to the acceleration of the hours in the delivery of letters to Australia, that appeared to be merely a voluntary statement on the part of the Company, which they were under no obligation to fulfil. Then it was said that the penalties had been increased. The object of increasing penalties was to ensure the fulfilment of the contract as entered into, and therefore it was essential that they should examine whether the increase of penalties in the amended contract was such as to give the desired assurance. He maintained that they were not. The present penalties applied to the several links in the whole route, and were cumulative. Under the new contract, however, the penalties were terminal, and they were not, in effect, any larger than they were at present. Even under the amended contract, there were some voyages in regard to which penalties were omitted. He was of opinion that when hon. Members talked of quadruple penalties being imposed on steamers not keeping time from England to Bombay and Bombay to Shanghai, it was all moonshine. The time allowed for the entire voyages was so ample, and the stoppages so entirely at the discretion of the Company, that, practically, the Company stood in no risk of incurring a penalty. The hon. Member who last spoke referred to the amount of the original contract of 1867 and to the reduction that had been made upon it. There was one thing that he showed effectually—namely, that that contract was a remarkably improvident one. It was an advantage that there would be no pre mium to pay under the second contract. Altogether there was a gain by the concession to the extent of £24,000 a-year at the outside, and the question was whether that was enough. The late Postmaster General and his Predecessor and the late Treasury were of opinion that it was not enough; and that opinion had at first been endorsed by the present Treasury, which, however, had given way to the remonstrances of the present Postmaster General, and said it had been greatly influenced by the fuller explanation given by the Company as to the cause of the reduction of their revenue, and the slight probability of any considerable increase resulting from the contemplated changes in their service. It was desirable that that fuller explanation should be laid before the House, and until that was done the House ought to pause before confirming this contract. The assumption as to the decrease in the profits of the Company did not appear to be based on sufficient data, and on the other hand sufficient allowance was not made for increased advantages which the Company enjoyed since the original contract was entered into. He believed that if the Government went into the market now they could get the service performed for one-half of the present amount—["No, no!"]—at any rate, for two-thirds. So far as the mails were concerned there was no advantage to the public in sending them through the Canal, but, on the contrary, disadvantage, if they looked only to the object of the subsidy—namely, the expediting the mails; while the advantages of the Company were very great indeed. By this arrangement the Company's steamers would gain a precedence in passing through the Canal over all their competitors in trade, and could be repaired and coaled in this country, instead of in the East, which would diminish their working expenses. He strongly urged the advisability of postponing the matter until next Session.

THE CHANCELLOR OF THE EXCHEQUER

said, he did not know that it would be necessary for him, or agreeable to the House, that he should attempt to follow the right hon. Gentleman (Mr. Dodson) through all the details of his statement. He very much regretted that the Postmaster General was not in his place, as he could reply more directly to the right hon. Gentleman's statements. The right hon. Gentleman had entered into some details of this contract, and had enlarged upon and criticized the 14 blunders which he said had been committed; but he (the Chancellor of the Exchequer) must say that they had been very considerably exaggerated; and, with respect to the omissions to which the right hon. Gentleman referred, the reason why they took place was, that it was intended to make alterations in the contract. With regard to the number of hours in which the voyages were to be performed, there had been, in point of fact, an improvement made in the contract, and the Government had given attention to those matters to which the hon. Gentleman the Member for Liverpool (Mr. Rathbone) had referred. The right hon. Gentleman directed attention to various matters; but, in point of fact, the question which the House really had to consider was one relating to the contract. This was a contract by which Parliament was bound for five years. During that time the mail service was secured by agreement with a respectable and responsible Company. It was a question, no doubt, whether, if they were going to enter into a new contract at the present time, the Government could not obtain better terms; but this was beside the question, because the Government were bound by the existing contract. The position of the Company was this—that whereas it formerly relied on its ordinary trade, its passengers and cargo, to enable it to make its profit, the Company now found itself so hampered by its contract that it could not avail itself of the natural and more advantageous route which it would prefer to take. Although some of the Company's ships wont through the Canal, yet others were bound to go by way of Alexandria. The Company were told by hon. Gentlemen opposite, and those whom they represented, that the Company were asking for a favour to themselves, and that they ought to give the State a share in the advantage. The Company rejoined that they did not desire to take all the benefit, and that they were ready to give some advantage to the public. They were ready to undertake that the voyage, or a certain portion of it, should be made in a much shorter time than at present. They were also ready to undertake that the mail service outwards should be performed in 24 hours' less time. Lastly, they undertook to accept a reduction of something like £20,000 a-year from what they now received. There were, also, some small further sums of about £4,000 a-year which they were willing to give up. The Company, therefore, said—"Relieve us from the disadvantage that now presses upon us, and we will give you an accelerated service, and accept a reduction of £24,000 a-year in the amount now payable for the remainder of the term during which the contract has to run." It was difficult to see why the Government should refuse this offer. The owners of private steamers represented that this change would place them at a disadvantage, because the Company were thus the better enabled to compete with them. That was an argument which, it appeared to him, was difficult to maintain in that House. Another argument was, that the Government were asked to give the Company so much that they ought to get more from them in return. Looking at the matter from the point of view which he had endeavoured to lay before the House, he did not think they ought to look upon the Company's difficulty as the public opportunity. The terms on the whole were, in his opinion, the best which the country was likely to get; and, therefore, he hoped the House would assent to the decision at which the Government had arrived.

MR. LYON PLAYFAIR

said: This contract should not be ratified by the House until its bearings on the general interests of commerce and of shipowners have been fully considered. The Peninsular and Oriental Steam Company is very highly subsidized by the State, and partly through that subsidy, but largely also by its own energy, has a magnificent fleet of vessels which have been an important means of keeping up our communication with Eastern countries. Principally and chiefly, in its relations to the public, it is a service for carrying mails speedily. Its vessels, in the light of cargo and passenger vessels, are incidental to that service, and have no claims to the consideration of the Government. Its subsidy is purely for mail transit, and is sufficient for that purpose. If it build largo vessels for cargo and passengers, care must be taken that the interests of these do not affect injuriously the mail service, for which alone the public pay £450,000 per annum. Now the Suez Canal has altered the conditions of cargo and passenger traffic. It may be, and is, an injury to this traffic, that they have to be sent by rail over the Isthmus of Suez, when, without disembarking they might pass through the Canal. If the steamers of the Peninsular and Oriental Company desire to pass through the Canal, they have a right to do so, provided the mails are carried with the utmost possible celerity, and provided, also, the Company do not use a Government subsidy to injure the private shipping enterprise of the country, which in its aggregate is much more important to the interests of the nation, even than the noble fleet of the contracting Company. A deputation which came to me last week to remonstrate against this contract represented upwards of 1,000,000 of tons of steam shipping, while the tonnage of the Peninsular and Oriental Company is 122,000 tons. Now, there is, rightly or wrongly, much apprehension among shipowners trading to the East. They do not fear a fair and open competition with the Peninsular and Oriental Company, but they ask us not to allow our mail subsidy to be used for an unfair competition in regard to passengers and cargo. Mail steamers have the precedence of ordinary vessels in the Canal. Suppose that a fleet of 20 vessels are arranged in order to pass through the Canal and that a mail steamer arrives, by this precedence the 20 merchant vessels have to give way to the mail steamer. If that steamer, in addition to the mail, carries passengers and cargo, as it always does, of course this precedence gives an enormous mercantile advantage to the mail carrying vessel. Some of the largest shipowners from Liverpool and Glasgow assured me when I was Postmaster General, that this precedence would be injurious to them and would give such an unfair advantage to their vessels, in regard to merchandize in which speed is an object, as would render competition difficult. If these apprehensions are true, this would be an unfortunate result of our subsidy. Because its effect would be that in 1880, when the contract ends, you might no longer find a large and fine fleet of fast vessels to compete with the Peninsular and Oriental Company, and you might be forced to renew a contract which is now so onerous to the nation. My predecessor in the office of Postmaster General (Mr. Monsell) had foreseen this evil, and he stipulated as a condition of allowing the vessels of the Peninsular and Oriental Company to pass through the Canal, that they should drop £30,000 a-year out of their present heavy subsidy of £450,000 per annum. Subsequently, he thought that this was too small an abatement upon what was essentially a new contract, and he raised the demand to £50,000. This was the state of affairs when I entered the Post Office. I thought the sum of £50,000 named by my predecessor was a reasonable price for a very important concession to a Company, which admits that the loss which they have sustained by the Canal competition has exceeded. £300,000 a-year. The Treasury, how-ever, did not agree with me in asking £50,000, and thought that £60,000 should be demanded. On what grounds the present Government have consented to the small abatement of £20,000 I do not pretend to understand. It is clear that with their mail precedence the Peninsular and Oriental steamers can drive the competition of light cargoes out of their way, and they may regain their £300,000 loss. If they do, the country ought to have participated in their earnings, and should have put upon them a substantial handicap to prevent private ships from being wholly driven out of the race. It was in these circumstances that the contract of the 8th July was presented to us. Most fortunate was it that Parliament required to see and confirm this contract, for it was strangely imperfect, and has already been substituted by a second contract of the 1st August, issued last Saturday. After the remarks of the hon. Member for Liverpool (Mr. Rathbone) I will simply remark that the first or abandoned contract left unregulated the whole of the mail service outward from England, and the whole of the homeward service—heavy and light—in the Shanghai, Calcutta and Point de Galle sections. The new contract, after we pointed out these strange omissions, does contain time regulations, but unsatisfactory ones. It, in fact, appoints the present time-table rules which are not a part of the old contract, but hitherto have been merely variable times fixed by the Postmaster General, and it makes them in the future fixed times by con tract. The disadvantages of the change will be understood, when I mention that the old contract fixed the times of voyages at 11 knots from Brindisi to Alexandria, and on other routes at 10 knots westward of Egypt, and 9½ knots eastward. All this is very moderate when we recollect that vessels from Liverpool to New York average 12 knots in a moderate passage. The new contract fixes no such speed, but, in fact, lessens it to under 9½ knots for the whole distance, by making the variable time-tables of the Post Office the fixed conditions of the contract. Now, these time-tables were more constructed in the convenience of the vessels as cargo and passenger ships than as mails, for they did not give uniform times of voyages to and fro, but allowed from 10 to 43 hours' difference in various routes so as to suit the requirements of mercantile adventure with which the Post Office had nothing to do. And this consideration to the Company, which had crept into the time-tables, is now made unchangeable by the new contract. It is true that, compared with the former time-tables, there is a saving of 24 hours to India; but much more than this could have been obtained by a proper application and reasonable construction of the old contract. The Khedive has lately entered into a Convention with England for hastening the transit across the Isthmus of Suez, and under this the 50 hours occupied by the heavy mail might have been largely reduced. It is quite clear that a proper use of the railway must gain, at least, two days over the Canal. By that route three days are required from Alexandria to Port Said, while 24 hours would be ample for the heavy mail from Southampton; as, in point of fact, 17 hours only are now given to the light mail from Brindisi, the actual time of transit being 10 hours. Take it as you like, the mail could be sent two days quicker by rail than it could be sent in the detour by the Canal. To speak generally, then, Her Majesty's mails are sacrificed for cargo and passengers. This is unjustifiable with the enormous sum of £430,000, which we are in the future to pay for them. The remission of £20,000, or £24,000, is nothing at all in comparison with the advantages which might have been derived by a better administration of the old contract. But what I complain of is, that the now contract stereotypes all the errors of administration into it, and renders it impossible till 1880 to obtain better terms for the public. Looking at the matter in its general relations, there are two views—one a departmental, and the other a national aspect. Let us first take the departmental one. We find, at the present moment, private merchant steamers making their runnings much quicker than the mail vessels; and it is certain that, if there were now no subsidy, we could get mails carried faster than the contract time, for the mails are lagging behind cargo. By this contract you aggravate the errors of a past administration, and you are content to take a low saving of £20,000, when in all probability, by their own showing, the change may gain to the Company at least ten times as much. Now, look at the national point of view. You are allowing this heavily subsidized Company to commit a crushing injustice to the unsubsidized mercantile navy trading to the East. With its mail privileges in the Canal and heavy subsidy, the Company can carry light and precious freights at great advantage over other steamship owners. The probable result will be that the latter will have to alter the fast ships, which they have constructed for the Canal traffic, and run slower ships for heavy cargo. And when your action results in this change, the year 1880 will be upon you, and you may have to renew your mail contract on its present exorbitant terms. The contract of 1867 was a bad one for the country, and now this new contract tends still further to clog the development of free trade in steam to the East, by intensifying the competition of an impolitic monopoly. The small saving of £20,000 to the Revenue is as nothing, compared with the present and prospective evils of a subsidized competition in a new route to the East. It was this consideration that induced the late Government, when I was Postmaster General, to demand some substantial reduction of the subsidy—our amount being £60,000, while the present Government is content with one-third. The policy of the Post Office for the future ought to be to have no highly subsidized mail contracts. We have before us an example to-day of the new contract for the West India mail service, which I had arranged before leaving office. Formerly, that was carried on at a loss of £110,000 per annum. The new contract is substantially at the price paid to the Post Office for the letters carried, and, after the first year or two, may result in a small gain, instead of loss. And, except at some out of the way small ports, this method of securing sea mails at the postage carried may readily be adopted for the future. Probably, it could be for the East, if we do not by this bad new contract drive competition out of the field by the year 1880. The mail subsidies of the Post Office have not promoted, but largely injured, the progress of navigation. Look at any of the modern improvements in steam vessels—iron ships, screw propellers, or compound engines. These have not arisen within the great subsidized Companies, but external to them. Subsidies promote conservatism in navigation—free competition leads to reforms and improvements. Now, why I particularly object to this contract is, that I fear it stands much in the way of the future and speedy abolition of the subsidy system in the Post Office. It intensifies the monopoly of a heavily subsidized Company, and tends to perpetuate itself by the pressure of an undue competition. When this contract was entered into, in 1867, the Suez Canal was rapidly in course of completion; and yet this Company, and the Government of the day, deliberately entered into arrangements for upwards of 10 years to go in the old way under a subsidy which is huge in amount. Now, the Company desire to adopt a route which they refused to believe in then, and drop their subsidy by a trivial sum in order that they may be allowed to travel on the same line as competing steamers which have arisen because that route was free from their formidable rival. I contend that this is unwise, departmentally and nationally, unless the terms of the subsidy are largely reduced. As this is not the case in the present contract, which is practically a now one, I will vote for the Amendment, which refuses to approve it during the present Session.

MR. GOLDNEY

said that the Peninsular and Oriental Company offered to accelerate the the mails by 24 hours, and to give the public £24,000 a-year on the condition that they should have the same trading facilities as other companies. The request was one which he could not but consider as perfectly reasonable.

MR. MUNTZ

believed the question to be a very simple one; it really amounted to this—whether for 12 months at all events, and possibly for five years, the public should suffer a loss of £24,000 and the mails be delayed 24 hours, simply because some private companies might otherwise be interfered with. The question was precisely the same as that which had been brought forward last year in respect to the Transatlantic mail. He should vote for the Motion with the object of getting the mails delivered earlier.

MR. T. E. SMITH

said, that the question was really whether an entirely new trade should be thrown open to the Peninsular and Oriental Company, and whether in carrying on that trade they should receive aid and subsidy from the Government. Under the present contract they might, if they liked, use either London or Liverpool instead of Southampton, and he did not, therefore, regard the compensation offered by the Company as anything like adequate to the advantage they would receive. He should vote for the Amendment.

MR. CHILDERS

said, he thought it would be better that the House should confirm the present contract. He was a Member of the Committee of 1864, which looked carefully into the question, and he also took part in the debate of 1868 when the original contract was adopted. What the House ought to appreciate was this, that when the contract was settled, there was not the smallest idea of the route through the Suez Canal being available for any purpose whatever. That, however, was now practically the sole route to the East, and therefore they had to deal with an entirely different state of circumstances. This fact ought to be taken into consideration, and although he regretted the original contract, yet as he had heard from the Chancellor of the Exchequer and the Secretary to the Treasury that a saving to the public of from £20,000 to £30,000 a-year would be effected, besides other advantages, he approved of the confirmation of the agreement at the present time.

Question put.

The House divided:—Ayes 145; Noes 23: Majority 122.

Main Question put, and agreed to. Resolved, That the Contract entered into between the Postmaster General and the Peninsular and Oriental Steam Navigation Company for the conveyance of the East India, China, and Japan Mails be approved.