HC Deb 08 August 1879 vol 249 cc507-28

Order read, for resuming Adjourned Debate on Question [7th August], That the Contract dated the 7th day of February 1879, entered into with the Peninsular and Oriental Steam Navigation Company, for the conveyance of the Mails between this Country and India and China, be approved.

Question again proposed.

Debate resumed.


said, he wished to draw attention to the considerations which had induced the Government to submit a fresh contract for the approval of the House. The existing contract would come to an end in 1880. That contract was originally to last 12 years, and was for £450,000. In 1874 it was renewed at a reduction of £20,000. In the early part of 1878 a new contract was proposed by the Postmaster General, who suggested the omission of the services from Southampton to Suez and from Point de Galle to Calcutta. After consultation with the India and Colonial Offices, authority was given, on June 20, to invite tenders according to the rate of speed, to be sent in by July 25, these tenders being for five, six, and seven years. In reply, tenders were sent in from the Sun Shipping Company, for a fortnightly service between Suez and Bombay; by Messrs. Smith and Co., Glasgow, for a weekly service between Brindisi and Bombay; and several tenders from the Peninsular and Oriental Company, and from Mr. Alfred Holt, of Liverpool. The tenders of the Peninsular and Oriental Company, at the highest rates of speed, were £410,000, and of Mr. Holt at £458,000; but the Post Office advised the acceptance of the offer of Mr. Holt's tender for £336,500 for 11 knots between Brindisi and Bombay, and Shanghai and Bombay at 10 knots, against that of the Peninsular and Oriental Company for speed of 10½ knots for the complete service to Ceylon and China, the India Office was opposed to Mr. Holt's contract; and the Colonial Office preferred the service of the Peninsular and Oriental, which avoided the sending of the Colonial mails viâ Bombay, especially as the Australian Colonies, Victoria, South Australia, and Tasmania, had entered into a separate contract for the conveyance of the Australian mails between Melbourne and Point de Gallo. The matter was referred to a Committee representing the various Departments, which pointed out, on the whole, that the tender of the Peninsular and Oriental Company was the most efficient, and, on the whole, more economical, as well as effecting a great saving in time. The Treasury, therefore, decided to accept the Company's tender for a service once a week between Brindisi and Alexandria and Suez and Bombay, and vice venâ, at a rate of speed of 11 knots an hour, and for service once a fortnight between Suez and Shanghai, and vice versâ, at a speed of 10½ knots, for a subsidy of £370,000 a-year. The penalties to be absolute, and the Australian mails between these points to be carried free of cost. It had been objected that a contract for an express service ought to have been entered into; but the tender for an express service would have been £50,000 more than the contract which had been accepted, and the Government were not of opinion that they would have been justified in paying so large an amount to secure a gain of 16 hours between Brindisi and Bombay, of 30 hours between Brindisi and Ceylon, and of 48 hours between Brindisi and Singapore. As to the complaint that a short time had been allowed for the tenders, he explained the delay, which arose through consulting the India Office, and he pointed out that the Government had been urged by the different firms to issue the tenders. The Government called attention to the difficulty of asking for tenders at such a short notice. The Liverpool Steamship Owners' Association, in a letter dated May 31, 1878, addressed to the Postmaster General, said— The Association think it very desirable that tenders should be invited in such time as will enable the House of Commons to confirm any postal contract before the Recess. A letter from Mr. Alfred Holt to the Treasury, dated May 9, 1878, stated— If there is to be 'substantial competition,' it is obvious that a sufficient time must be allowed, after the acceptance of a tender, to make the preparations necessary for so extensive a service. In the present case, such confirmation (i.e. by the House of Commons), if not made before the end of this Session, must necessarily be postponed until the spring of 1879, thus allowing less than a year between the confirmation of the contract and the commencement of the service. In so short a time as this, I am enabled by my practical knowledge to say decidedly that it will be impossible to make the necessary preparations. The present contractors have their plant of steamers ready, and they may safely tender for the service, assured that even if the House of Commons refuse to confirm the acceptance of the Post Office their position is in no way altered.…On the other hand, the outside shipowner is in a totally different position. He has to build a large fleet of powerful steamers, and, obviously, he dare not venture to sign a contract, with the risk of having his arrangements upset by a vote of the House of Commons. Unless, therefore, the confirmation can be given before the House rises in the autumn, I venture to assert that any chance of competition that may be given will be little better than apparent. There was another point strongly objected to, and that was the length of the tender about to be submitted to the House. It was objected that to issue a tender for eight years practically crippled other shipowners, and gave far too great a power to this particular Company. He had before him the French contract for the Indian service; that contract was for £340,000, and it was made for 12 years. Another matter to be considered was that if the contract were made for a shorter period the tender would be increased. The difference in the Peninsular and Oriental charge for five and eight years would be £20,000. The Viceroy's Council declared that— The duration of the contract is a matter of importance, and, on the whole, we are disposed to think that it might advantageously be left as a subject for tender. We do not think that a contract for eight or ten years would be excessive, especially if the speed required be such as to involve the construction of a class of vessels specially adapted to the service. The Bengal Chamber of Commerce stated that— The duration of contract should be made matter of tender; as contractors would doubtless accept a long contract on more favourable terms to the public than a short one. In these circumstances, it was obvious that only by a permanent tenure of a contract of this kind could the Company recoup itself the expense of performing the service as it ought to do properly. He believed it was well known that the Company, which was now offered this contract on the part of the Government, were making arrangements for the building of vessels at a cost of over £700,000; and surely such an expenditure as that would not be justified by a short contract. He did not, therefore, think that eight years was an unreasonable term. They were told that 9s. 6d. was an excessive mileage; but he did not think that that could be maintained, looking at the fact that for a similar contract the French paid a mileage of 10s. 4d., while Mr. Holt's rate of mileage was 10s. 3d., which was in excess of the accepted contract. There was another point, and that was the question whether or not we should have no contract at all, but allow an open system by which anybody might carry the mails. Not very long ago, a Memorial from merchants and bankers engaged in the trade with India and China, and signed by most of the merchants in the City, was presented to the Postmaster General. They protested as strongly as they could against any division of the Eastern mail services into several branches instead of retaining the homogeneous system under which these mails had been satisfactorily carried for so many years. They pointed out that any such division of the mail service would be fraught not only with inconvenience but injury to the important mercantile interests which they represented. They submitted that most of the merchants engaged in trade with India were also more or less interested in that of China, and vice versâ; while the banking and exchange operations carried on with those countries were so completely mixed up together that they could not be carried on successfully unless the postal advices were deliverable at the same time. The Government felt, and he was sure the House would feel, upon considering all the circumstances, that in recommending a renewal of the contract with the Peninsular and Oriental Company for a term of eight years upon what was practically a reduction—and a considerable reduction—in the amount of the subsidy, they were taking the stop best calculated to secure, not only the cheapest, but the most efficient service.


complained that this contract was not brought before the House till within a week of the probable end of the Session. Happily, there was considerable rivalry in relation to these contracts. He thought it was the duty of the House and the Government to utilize those rivalries; but the Government, he thought, had not utilized them. The Postmaster General of 1866 maintained that even six months was too short a period to allow for the making of tenders for such an important undertaking as this. Nevertheless, the Government had only placed this contract before the public for 29 days—a period which he held to be altogether inade- quate, especially as the Government had had repeated reminders during the past two years that the existing contract expired in 1880. The speed of the new contract was very little in advance of that of the old, being only 17 days and 15 hours, as compared with 19 days and 22 hours; but even this improvement was by no means satisfactory to the Bombay people. There was no reason why the people of Bombay should not have their views carried out and have their letters delivered in 16 days. It had been said that the sea between Brindisi and Bombay was not a good sea. The same had been said as regarded the sea between here and the Cape; but on investigation it was found that from the Cape to Madeira it was the best sea that vessels traversed. He could not understand why the later experiments with the Atlantic mails were considered to have ended in failure. From the day the subsidy ceased there was immediate competition with resulting improvement; the White Star Line and the Inman Line made quicker voyages than had been attempted by the subsidized Cunard Line. It was stated in the Report of the Postmaster General that the second and higher rate of postage, to cover the extra cost of stopping at Queenstown, worked very well indeed. The opinion of the Postmaster General, as drawn from the Report for 1878, was to the effect that the new arrangements had the advantage of securing the most efficient vessels employed in the Transatlantic trade, and had not failed to give general satisfaction, and, in order to admit of better terms being secured in the future, should circumstances become more favourable, the arrangement was to be made for one year only, and was to be terminable on six months' notice. He wished that we had as good a service on the Eastern seas as we had on the Atlantic; and it was the duty of the House to take care that, as far as possible, an equally good service was secured. In 1877, we sold to the East goods worth £62,750,000, and the United States £19,000,000 worth. Financially, the new arrangements involved a great increase of loss to England and India. The entire expenditure in relation to the contract which expired in 1867 was £396,000, reduced by £236,000 received for postage to £160,000, which was divided between England and India; under the contract about to cease the loss to be so divided was £284,500, but under the proposed contract the loss would be £330,000; and in eight years the loss would be to England £2,000,000, and to India £629,000. It was admitted that, under former contracts, we were to pay 9s. 6d. per mile, while we had formerly paid respectively at the rate 6s. 9d., 7s., and 4s. 2d. Instead of comparing this with the French service, which cost 10s. 4d., as had just been done, we ought to compare it with some of our own services—say, that between Victoria and Gallo, which had steadily diminished until it had fallen to 6s. 8d., while the cost of this service had been gradually increasing. He held that the true route to China was across India. They were told that the great point was to maintain harmony in the service; but if that were to be done by keeping it in the same hands, that looked like monopoly. We could have a better, quicker, more certain, and cheaper service if we were to divide it into sections. It was admittedly necessary to have communication of the most speedy kind between this country and Bombay; but he believed that that object could be secured without having recourse to subsidies. From the Correspondence in the hands of hon. Members, it was clear that the Indian postal authorities were of opinion that the mails between India, China, and Japan could be managed better from Calcutta than they could be from London. Then as to Australia, he understood that the mail contract had been entered into in reference to the India and China services alone, and without any reference to Australia. He complained that the Orient Company had not had an opportunity of offering their services either to this country or to Australia, and argued that the Government of Australia would probably reap an advantage of £20,000 a-year to the detriment of the taxpayers of this country through the provisions in the contract, in accordance with which the Government would hand the postages over to the Victorian Government. Contending that if the contract were agreed to for three years only, the Government would have ample time to send out fresh tenders, he begged to move that the period of time in connection with the contract be reduced from eight years to three.


in seconding the Amendment, said: As different Members of the Government are fully aware, I have been most anxious not to approach the subject from any Party point of view, and to avoid having to make any charge against the Government with respect to this question. I have done my best to name beforehand where I thought mistakes might be committed, and show how they might be avoided; and I wish it to be distinctly understood that I believe both the Postmaster General and the Secretary to the Treasury have approached this subject with the sincere desire to do what is best for the Public Service. But, unfortunately, from the changes in the Parliamentary Heads of Departments, so frequent in our system of government, only the permanent officials can remember and place before their Chiefs the practical details of departmental work. But it is clear that a mistake has been committed, and the Government will be very much to blame if, when the whole case is put clearly before them, they should persist in a course which will entail great loss upon the country, and throw great difficulties in the way of the development of our shipping trade. It was perfectly understood between the House of Commons and the Government that two years' clear notice should be given in order to allow time for the necessary negotiations and preparations for a now service, so that the Government might not be bound hand-and-foot to the present contractors. It is most important that the Government and the House should understand the principal ground on which we maintain that this contract ought not to be confirmed for a period of eight years. It is this. Owing to the necessary time not having been given either for sending in tenders or for the arrangements consequent on any tenders being accepted, there was, and there could be, no real competition for the service, and that, feeling this, the Peninsular and Oriental Company was in a position to dictate terms most disadvantageous to the public. We contend, therefore, that the House of Commons is bound to exercise the right which it reserves to itself, and which it exercised most advantageously under similar circumstances on a quite recent occasion, and refuse to confirm this contract, at any rate, for so long a period. Both by enactment and by practice the House has given full and fair notice that it does not consider that it is bound as a mere matter of course to ratify such a contract. I will detain the House only a few minutes in pointing out what really has been done. Full notice was given to the Department of what was necessary by a Question put in my behalf by the hon. Member for Sunderland (Mr. Gourley) on July 31, 1877. In reply to that Question, the Postmaster General said ample time would be afforded to all parties, not only for sending in tenders, but for their consideration by the Government when they were sent in, and I am sure that there was every intention that this should be carried out. But I will show presently how, from their mistakes, this Department found themselves unable to carry out this pledge, and, practically, it was not carried out. It was, of course, the duty of the Department, before issuing the notice, to possess themselves of all the knowledge necessary to enable them to ask for tenders, so that they might be in a position to act promptly when the time came for giving the two years' notice. Instead of this, they appear to have delayed getting this necessary information until the notice was actually given; and it was not until the 26th June, or nearly 12 months after the Question to which I have referred had been asked, and six months after the notice to terminate the contract was given, that the Post Office were in the possession of the information, which they might have had just as well, and were bound to have had, six months previously. The object was, in giving the notice, to enable them to carry out their pledge. The result might have been foreseen. Only 30 days were given to the Steamboat Companies to make their arrangements and estimates and send in their tenders, and the contracts could not be confirmed during that Session; and the consequence of that was that all those who had to tender, except the Peninsular and Oriental Company, who, having a fleet ready, ran no risk, were obliged to ask an unduly large amount in order to guard against the possibility of the tender, though accepted by the Government, not being confirmed by Parliament; thus materially raising the offers they made, and preventing the saving which might otherwise have ac- crued to the public. It is evident that all but the Peninsular and Oriental Company were obliged to ask a very much increased price to cover the risk of having to commence their preparations before the contract was confirmed or the greatly increased cost and difficulty of making in 10 months the preparations which it was desirable, and intended that they should have two years for completing. It must be evident, also, to any practical man that the time allowed was too short to allow of those arrangements between different Companies, engaged in different branches of the trade, which might have produced the least costly and most efficient service for the public. Practically, there has been no competition. The Peninsular and Oriental Company alone among the competitors had a suitable fleet ready to perform the service, and were able to dictate their own terms, and the result is that the subsidy proposed to be granted to them is far in excess of the sum which would have been asked had there been an effective competition. Again, the Department issued tenders with the evident intention of having a very quick service; and, of course, under these circumstances, all the tenders, except the Peninsular and Oriental Company, were obliged to provide for the shortest possible delay at the different ports, and in every respect for a despatch service. The competitors with the Peninsular and Oriental Company, knowing the great stress that had been laid upon quickening the service, were obliged to calculate on only such delays being allowed as were necessary for the mail service. Had the trade generally understood that they would have been allowed delays sufficient to admit of their going in for a general trading service the saving would have been immense; and it seems probable that if due time had been given, so that the tenderers could have felt confident of having sufficient time to make their preparations after the contract had been confirmed; and if it had also been understood that facilities would be given, as they have been given to the Peninsular and Oriental Company, to compete for the general cargo trade, a great part—some believe the whole—of the loss of the country on this subsidy might have been saved. In thus not obtaining in due time the information necessary to enable them to negotiate and act, and in thus reducing from two years to 10 months—or, more correctly speaking, to six months, for the contract is not yet confirmed, and the new service is to commence in February—the time intended to be given to shipowners to make the necessary preparations, and add other omissions and commissions which have been enumerated, it must be evident to the House that a great mistake has been committed, and that the Government and the House should seek to remedy this mistake by only confirming the contract for three years. But I have no wish to dwell upon these mistakes; because my object is to show how they may, to some extent, be remedied, and how a very large sum may be saved to the taxpayers, and a most unfair injury to the shipping trade of the country averted. Those who are opposed to the confirmation of this contract maintain that the service ought ultimately to be performed with an equitable share of a reasonable postage; and they contend that would be done naturally and well by the boats running in the trade, if they were not interfered with by the unfair competition of a subsidized line. The subsidized line itself would probably undertake the service on such terms if it did not feel that it could ask more, and that the game is in its own hands by the mistakes of the Post Office officials. The question that now suggests itself is—How are we to escape from this future position? Well, probably the easiest way, and the one which would give some compensation to a Company which, on the whole, have done their work well, would be to accept the Amendment of the hon. Member for Hackney (Mr. Holms). But suppose the Peninsular and Oriental Company should be so unwise as to refuse such an arrangement, then the Company whose tender was first recommended for acceptance is prepared to undertake the conveyance of the mails on terms which would enable the service to be given up at the end of two, three, four, five, six, seven, or eight years, at rates diminishing according to the competence of the Company for the service. The Postmaster General, in recommending the acceptance of the tender of the Company, says of Mr. Alfred Holt, its managing owner— From the high character of Mr. Holt, a shipowner, I do not doubt he will discharge faithfully and efficiently the important duty he undertakes. The acceptance of this offer would provide the most economical and advantageous way of putting an end, at the earliest moment possible, to this system of high subsidies at the cost of the British taxpayer. It would place in the hands of the Government the power at any moment, after two years, of accepting an offer to undertake the postal service for the remuneration which the postage gives to the Peninsular and Oriental Company, or any other Company or combination of Companies; while if in the proposed contract with the Peninsular and Oriental the arrangement continues for eight years, the terms of this offer would save £560,000 with absolute penalties, or £592,000 if the penalties were not absolute. Under it the mail boats would abstain from any competition for the carriage of goods or passengers; but, if the Government so wished, would carry on their account, profit and risk, any specie that might be going for the three years to which the hon. Member for Hackney by his Motion proposes to limit the contract with the Peninsular and Oriental Company. Mr. Holt would undertake the service at £30,000 a-year less than the Peninsular and Oriental Company charge with an eight years' contract, and this offer is not mixed up with any conditions as to the conveyance of passengers or cargo. Let me recapitulate shortly the advantages which such an offer has over the contract we are now asked to confirm. In the first place, if this offer were accepted, the mail boats would, if necessary, carry neither passengers nor cargo, and the development of our steam traffic would no longer be impeded by a subsidized Company using its excessive subsidies as a means of driving away competition. In the second place, if such a contract be cancelled at the end of any year after the second year, the Government would then be placed in a position to accept a proposal to carry the mails for the postage earned. If this offer, having been accepted, were cancelled at the end of the third year—the time for which it is proposed that the contract with the Peninsular and Oriental Company should be confirmed—the country would save £60,000. If put an end to at the end of the fourth year, there would have been saved £160,000. If at the end of the fifth I year, it would have saved £265,000. If at the end of the sixth year, they would have saved £360,000. If at the end of the seventh year, they would have saved £462,000. And if at the end of the eighth year, they would have saved £560,000. And, in addition to this, there would be the profit on the carriage of specie, if Government chose to undertake that business. He did not wish to underrate the consideration undoubtedly due to a Company which had carried on the service for a long time satisfactorily. They were entitled to a preference, but nothing more; certainly not to £560,000 out of the money of the taxpayers of this country more than the sum for which the packet service can be equally well and as rapidly performed by other steamship owners. That is really what the present contract, owing to mistakes committed, proposes to do. But the real object of the offer is to get rid of this system of expensive subsidies, which burdens the English taxpayer, injures the trade of the country, and retards, instead of promoting, the improvement of steam navigation. The proposers of this are quite willing that the offer should be made to the Peninsular and Oriental Company to take the contract for the eight years, if they like, for the simple postage; for that is really what it ought ultimately to be done for. We believe that it would pay the Peninsular and Oriental Company to undertake the service for the postage rather than give up the contract; and, if not, if the Government were in a position to accept a proposal to carry the mails for the postage, the steam shipping trade to the East, relieved from the unfair oppression of an excessively subsidized Company, would soon be in a position to undertake the service. If it was asked why the offer was not made previously, I would ask anyone to read the invitations to the tender issued by the Government. It was assumed that no steamboat owner could suppose that a tender on such a footing was intended to be covered by such an invitation; while the short time given to send in tenders, and the impossibility that any such contract could be confirmed in that Session, practically, gave no time to negotiation or inquiry. But if the Government are not prepared for such a complete reform as this, then they had better fall back upon the proposal of the hon. Member for Hackney, to confirm the proposed contract with the Peninsular and Oriental Company for three years, appointing at the commencement of next Session a Select Committee upon postal matters. There would be no difficulty in convincing any business-like Committee in a very few days that the present system is most unduly and most extravagantly expensive to the taxpayers; and that, so far from benefiting the shipping trade, it actually discourages that competition of private effort to which alone we can look for such development of our shipping trade as will enable us to maintain the lead we now have in the commerce of the world. Look at the expansion and improvement that has taken place in the Atlantic trade since the system of subsidies has broken down. The Government now have ample time, after possessing themselves of all the information which such a Committee would give them, to invite tenders on the most advantageous footing for the public. Time would be given for the desirable negotiations and arrangements, while the shipping trade, knowing that they would have ample time to prepare for the new contract, would be able to make their tenders with confidence. They could be confirmed before Parliament rises, and would be able to complete their arrangements in the most economical and efficient manner. I am assured by those upon whose assurance I can rely that had fair time been given for sending the tenders and negotiating calculations, and for building the necessary steamers after the contract had been confirmed, the India postal service, and that for the Straits and China by making Calcutta the port of arrival and departure, would have been tendered for at the speed of the proposed contract, for about a half of the subsidy now under consideration, the vessels in this case being of a size that could carry both goods and passengers; and if the Amendment is accepted, and the necessary time given, I am informed this would still be open to the Government. I am not here to advocate the interests of any individual shipowners. Our contention is, that none of the tenders made in the present instance were likely to be such as it would have been advantageous to the country to accept. Our sole object is to get rid of a system expensive to the country and paralyzing to the private enterprize of its steamship owners—a system, moreover, which gives to other nations the extremely false impression that the way to create a shipping trade is to subsidize it. Now, I have seen it urged that the Government, having accepted this contract, it would not be fair to the Peninsular and Oriental Company, at this stage of the matter, to re-consider the question. But, as I have pointed out, both by enactment and practice, Parliament has given full notice that these contracts are to be re-considered previous to their being confirmed; and though the Peninsular and Oriental Company may naturally be disquieted at not getting this exorbitant subsidy for a period of eight years, they have been in no way prejudiced by the action of the Government so far. On the contrary, by our proposals to allow them to have the contract for three years, at as high a rate of payment, they will be large gainers by the action of the Department, as they will have three years more of the large subsidy they would not have had had the Department given ample time to obtain offers from other competitors, which I have shown would have been open to the Government, had the Department given sufficient time to insure a bonâ fide competition. I repeat, even if they accept the offer of this contract for three years only, the Peninsular and Oriental Company will be large gainers by the mistake that has been committed; and one need, therefore, have no scruple whatever in limiting to three years this exorbitant subsidy. I would, therefore, urge most strongly upon the Government and the House of Commons to limit to three years' duration this contract, which is most onerous to this country and India, and most unfavourable to the development of our steam trade with the East and our Australian Colonies.

Amendment proposed, At the end of the Question, to add the words "Provided, That the period of the continuance of the Contract be reduced from eight years to three years."—(Mr. J. Holms.)

Question proposed, "That those words be there added."


pointed out that it was in the interests of the commercial world and of the general public that mails should be conveyed with rapidity, and by a great Company with a thoroughly efficient fleet, and that such a Company could not undertake such a contract for so short a term as three years except at a greatly enhanced cost. Hon. Members who had spoken in favour of the Amendment appeared to have entirely ignored the fact that similar arguments were brought forward a few years ago in reference to the United States mail. Under the influence of those arguments the Government yielded, and adopted what was called the postal system; but there were such complaints with respect to the carrying of the mails, and the system worked so badly, that it was impossible to resist the arguments that were advanced in favour of reverting to the old system. Since then there had been no complaints, and the commercial world had benefited to a very considerable degree.


thought nobody could deny that the work had been well done by the Peninsular and Oriental Company. On the other hand, their return for it had been small. Their dividends had never exceeded 6 per cent, while they had sometimes fallen below 5 per cent. In considering the question of breaking up the contract, one had to bear in mind the amount of depreciation which their enormous plant—estimated by themselves at £4,000,000, although some disputed that estimate with reference to the present time—must suffer if their vessels ceased to be used as mail steamers, and which would more than represent the dividends they had paid during the whole time the contracts had run. Also the 16,000 seamen the Company employed, and who were now available in time of war, might, and probably would, be dispersed. The Peninsular and Oriental Company had, he maintained, established a fair claim to the contract in question. He held that there had been sufficient time given to other Companies for preparing tenders, and there had been four competitors for the service. The contract of the Peninsular and Oriental Company ought to be confirmed, because their tender was the lowest. He denied that there was any loss on this subsidy. There was no Department that yielded a greater profit to the Revenue than the Post Office, and the profit thus obtained must be looked at as a whole, and it was unallowable to refer to any one special service as failing to contribute to that profitable result by reference to letters carried and money paid, as the subsidy stimulated and succoured trade and commerce far beyond the mileage distance that the steamers worked over. It was not correct to say that the contract could not be divided, and that, therefore, many shipowners were prevented from tendering. The fact was, it was sub-divided into four different parts—namely, between Suez and Shanghai, Brindisi and Alexandria, Suez and Alexandria, and Suez and Bombay; so that it did not necessarily follow that the competitors were required to tender for the whole service or none, as several times stated in the course of this debate. By means of the subsidies, which for a number of years had been given to Companies for the mail services, many of our steamships had reached their present point of perfection. If the contract had been given to persons who had not already the ships requisite for the postal service, as the Peninsular and Oriental Company had, the present unsound state of our shipping trade would have been aggravated by bringing many more ships into the trade, and increasing the number of vessels competing for existence, when it was well known there were already more in existence than could be worked except at a loss. If it were still possible to accept the alternative offer made by the Peninsular and Oriental Company to contract for five years, at an increased subsidy of £20,000, he should be glad to see a compromise effected in that way; but if that could not be done he was prepared to support the view of the Government.


thought the careful and detailed manner in which the Secretary to the Treasury had revealed the whole state of the case ought to have satisfied anybody of the bona fides of this contract. In his opinion, the Government had made the best arrangement that was possible on a review of all the circumstances. He ridiculed the idea that there had been no real competition, because the time for sending in tenders was limited to 29 days. It was well known the then existing contract was expiring, and no Company which intended to compete required anything like six months' notice, for they would naturally make their preparations from a knowledge of the date of the expiration, and would be ready to compete the moment the time came for sending in tenders.


admitted the difficulty which existed in deciding on the respective merits of competing tenders, and thought there had been no lack of competition in the present case. Indeed, there had been a keen competition, and a considerable number of competitors whose capacity could be relied upon. But it was open to considerable doubt whether the Government had accepted the best offer, because Mr. Holt's alternative tenders were either lower in amount or offered advantages in the saving of time. The difficulty appeared to have arisen with the Colonial Office, which objected to the mails from China being conveyed viâ Bombay. In all the circumstances, the strongest objection to the proposal made was that the contract was to be binding for eight years. He thought it had been practically settled some years ago that contracts of this kind should not be entered into for a longer period than five years; and in this case, where there was some doubt as to which was the best tender, eight years seemed an unreasonably long period for which to confirm the contract. He would support the proposal to confirm it for three years only; and he concurred in the view of those who said that, in the meantime, a Committee of the House should consider the whole subject.


said, he had been flooded with pamphlets and articles which came from disappointed competitors, who used rather strong language when they talked about the supineness and incompetence of the Post Office authorities. The time allowed for sending in tenders was amply sufficient; but from 12 to 18 months was required for the building of ships, when new ones were necessary for the maintenance of a certain rate of speed. The Peninsular and Oriental Company were, in his opinion, justified in asking for a small increase in their mileage rate, owing to the great expense they must necessarily incur to secure an increased rate of speed.


said, the real question before them was whether the House would refuse to sanction a contract which had been recommended to it after the most careful consideration, not by the Post Office or the Treasury, but by the whole Government of the country, and which no one alleged would not be amply carried out by the contractors. Would the House refuse to sanction that, in order to substitute—what? He asked, emphatically, what it was the Mover and Seconder of the Amendment would propose in substitution for the contract which the House was now asked to sanction? The hon. Member for Hackney (Mr. J. Holms) sought to defeat the contract—as his Amendment, if adopted, virtually would—by limiting the duration of the contract for three years in place of eight, without suggesting any substitute. The hon. Member for Liverpool (Mr. Rathbone), on the other hand, took a letter out of his pocket, and intimated that the writer, a friend of his, was ready to undertake the work if the contract were defeated. Long as he had sat in the House he had never heard—he hoped the hon. Member for Liverpool would excuse him for saying so—so audacious a proposal. If such were to be the practice of hon. Members of repute in the House of Commons, honourable competition for contracts would be stopped, because no one would tender who could get a Friend to make a proposal at the last moment in the House of Commons. If this contract were now cancelled—and, as he had said, the change from eight years to three would virtually cancel it—what contractor in the future could rely on the faith of Governments? If the House acted in the vain hope that men connected with the shipping interest were so patriotic as to carry letters to the end of the earth for nothing, he certainly was not prepared to take the responsibility. Two years ago he attempted to establish the free system in the Atlantic service between Liverpool and New York; but at the end of 11 months the system collapsed. He had been charged with having abandoned it; but the fact was, it deserted him. Let not the House suppose that the substitution of five for eight years would be economical. Mr. Holt would not tender for any term under eight years. The Peninsular and Oriental Company asked £20,000 a-year more for five than for eight years; while Messrs. Smith, who tendered for the Bombay Service, asked £60,000 a-year more for five than for eight years. If they reduced the term, the country would have to pay for it through the nose, and it was only by lengthening the term that they could get a satisfactory and economical working. The Government had taken every precaution to arrive at a sound and just conclusion in the matter. On all these grounds, he hoped the House would support the Government, and ratify the contract which they had made.


could not approve the extension of the contract to eight years. It was unnecessary and prejudicial to the Public Service If improvement kept pace during the next eight years with the last, the speed of this contract would be below the average of steamers travelling to the East by one or two knots an hour. He hoped the compromise suggested by the hon. Member for the Tower Hamlets (Mr. Samuda) would be accepted.


remarked, that representing, as he did, the port of Southampton—the birth-place of the Peninsular and Oriental Company—he had, throughout a life-time, watched with pride and satisfaction the wonderful progress of that Company since 1836. For 42 years its splendid ships had carried Her Majesty's mails between England and the Orient efficiently and well. Taking all things into consideration, the service had been maintained as faithfully and as regularly as the carrying of the mails between Queenstown and Holyhead, and this had been rendered possible by a maritime organization unsurpassed in magnitude and completeness by any similar Company in the world. The great strength and splendid efficiency of the Peninsular and Oriental Company were matters of which Englishmen might well be proud. Its noble fleet comprised 64 fine vessels, with an aggregate registered tonnage of 125,000 tons, and its operations were sustained by a capital of nearly £5,000,000. Her Majesty's Government could, therefore, with safety, intrust such a contract to its keeping, knowing what had been done in the past, and having in this the best assurance as to what would be done in the future. As the Company's ships had left the port of Southampton, he (Sir Frederick Perkins) had no interest in them beyond that of old association. He knew that a mistake had been made in leaving that port, which the best friends of the Peninsular and Oriental had never ceased to regret; and he felt that the removal from the new contract of the condition which required the mail steamers to call at Southampton would be a loss to the nation, as well as a disadvantage to the interests of the Company, since passengers would much prefer embarking and disembarking there than brave the dangers and delays of the English Channel. Southampton was the Blackwall of the southern coast, and was, indeed, unrivalled for its clock accommodation, for the convenience it afforded of going on board steamers direct from the railway carriages, and for the advantage which those steamers had of leaving or entering at any hour, and at any state of the tide. It was ridiculous for those who had been unsuccessful elsewhere thus to bring their grievances into the House of Commons. Having been fairly worsted, they should have taken their defeat like men, and not have come there as they had done to expose the weakness of their case. The Peninsular and Oriental Company owed the new mail contract to no consideration shown for the Company's past services, nor to its unique position as the only Company possessing a fleet absolutely ready to carry out the work; but they owed it simply to the fact that the tender made by the directors for the services required by the Government was the cheapest tender in point of price, while it was also superior in the quality of the service it offered to those sent in by other shipowners. Hence, as the Company had won the contract by the lowness of their price and the increase of their speed, it was only just and fair they should have it. He would conclude by reminding the Government that they should endeavour to secure the confirmation of the contract, as, by so doing, they would cut the ground from beneath the Opposition, and show that in this respect, at least, the Session of 1879 had not been altogether the fruitless and barren one it was alleged to have been.


said, he had listened to the noble Lord the Postmaster General, who had very ingeniously and wisely passed over the charges against the Government, and treated it as a contract which was already completed, and could not be set aside. In making the charges he did against the Government he firmly believed neither the noble Lord nor the Secretary to the Treasury had any hand in any under-handed work; but they were very much in the hands of the permanent officials of the Department, and the result to the public was nearly as if they had been concerned in it. He had, month after month, put down Questions on the Paper, asking when the tenders would be out; and, no doubt, the officials had managed to keep the tenders so late that there would be no time for competition. When, at last, the tenders came out, he took the trouble to go to the City to ascertain whether it was possible, at that late time, for tenders to be sent in, and, without exception, they all said it could not possibly be done; that they had to build their ships, and that the tenders should have been out a year sooner in order to give the public the opportunity of reaping the advantages of free competition. It had been said that the complaints only came from disappointed competitors; but he was not a disappointed competitor. He had nothing to do with any public Company whatever; but what he did was simply in the interests of the public.


sincerely hoped that every Irishman in the House would back up the Government in this Vote; because, when an attempt was made by Irishmen to establish a trade between Galway and Now York, those Liverpool gentlemen were the persons who paid the pilots to sink the ships in the middle of the bay.

Question put.

The House divided:—Ayes 54; Noes 142: Majority 88.—(Div. List, No. 217.)

Main Question put.

Resolved, That the Contract dated the 7th day of February 1879, entered into with the Peninsular and Oriental Steam Navigation Company, for the conveyance of the Mails between this Country and India and China, be approved.