Great Britain. Parliament. House of Commons. Select Committee to Inquire into the Contract Packet Service

“ Because, were it even possible to create a competing Company on so extensive a scale as would be required to perform efficiently the Contract Mail Services alluded to, the two Companies would either, one or both of them, be ruined—or, what is much more probable, for the protection of their mutual interests would coalesce, and thus establish a stronger monopoly than could ever be effected by a single Company. ”

“ In the petition you object not to one contract in particular, but to the system of contracts altogether?—We object not to the whole system of contracts, but to the system under which it has been carried on; in the first place, there are put into the contracts conditions which are never acted upon; that I consider extremely wrong; it keeps all honest men away. ”

“ Who, that has had any experience of the operations of commerce, or of the practical business of Government, would estimate the value of an accelerated and certain transit of a merchant’s letter or a Government despatch by the amount of postage which the one brings in, or the other would bring in, to the revenue? ”

“ And the present Lord Bishop of Calcutta, in a public address at a meeting in that city, said, that “the extension of steam navigation with India would be opening the floodgates of measureless blessings to mankind.” ”

“ From this it appears that the profits made upon the capital of the company, about equal ten per cent. as a total sum; but that after reserves for depreciation, repairs and insurance, and expenses of management, there has remained hitherto not more than eight per cent. for the shareholders. The question of how much of the earnings ought to be kept in reserve to meet depreciation, is so discretionary that I have no expectation that any company would ever admit that there was a surplus profit to be handed over to Government ”

“ That fully recognising, as one of the first duties of a Government, the protection of the public interests, by economising the public resources, the mode adopted for doing so, by closing at short periods and re-opening to 30 public tender these large Contracts for the Mail Service, is neither effective for benefiting the public, nor altogether equitable as regards the interests of those private parties who had embarked capital in the formation of the extensive steam navigation enterprises, by means of which these important postal communications were first established. ”

“ One principal cause of the vessels being occasionally beyond the time stipulated in the contract, in arriving at Hong Kong, was, that in defining the time in the contract no allowance was made for the north-east monsoon on the passage eastward, as is done for the south-west monsoon on the passage westward. The grievance to the Hong Kong merchants could, however, have been but of trifling importance, as the steamers, even when behind contract time, always arrived so as to afford to the China merchants ample opportunity to answer letters by the return mail. ”

“ Because it is but just that parties who have embarked so large an amount of capital in the establishment of such enterprises, and who have thereby, as has already been shown, been the means of effecting important public benefits, should have a preference of employment,5 so long as they perform the public service efficiently, and are willing to do so on terms realising to them no more than a fair commercial profit. ”

“ For the rapid and secure performance of the public mail duty, no branch of the mercantile marine is so well prepared as her Majesty’s naval department. But by the employment of her Majesty’s vessels, light merchandise could not be conveyed; the habits and comforts of the passengers could never be so well provided for as by persons paid for such duties; and as regards the troublesome details of carrying passengers, freight, and merchandise, the war steamer must be less adapted than the merchant vessel. ”

“ Because experience has amply proved, that capitalists cannot be induced to embark their money in any extensive steam navigation enterprise, intended to compete with one previously established.
3. Because the very act of terminating these Contracts at short periods, and then putting them up to public competition, increases the difficulty of obtaining bonâ fide competitors, inasmuch as no capitalist of ordinary prudence will embark in an enterprise dependent for its success upon its employment in a public service of so uncertain or transient a duration. ”

“ Do you think that if a public department, instead of laying down specific rules to which all parties must conform who make engagements with regard to the specifications of particular 59 vessels, that would be a better mode of excluding favouritism than the mode which is now pursued?—Most assuredly it would be a proper mode. ”

“ Contract for conveying Mails between Suez and Aden, Ceylon, Madras, Calcutta, Penang, Singapore, and Hong Kong. COMMENCED JANUARY 1st, 1845.
For several years prior to the arrangement of the Contract with this Company, for the accelerated transmission of the India Mails to and from Alexandria, much public solicitude had been manifested for a more comprehensive system of steam communication with India than that which had been established by the Government and the East India Company. ”

“ They continued, however, to prosecute their enterprise; and the celerity and regularity with which their steam packets made their passages soon began to attract the attention of the public. The merchants began to complain loudly of the inefficiency of the transmission of the Mails by sailing packets; and it was at last intimated, from an official quarter, to the Managers of the Peninsular steamers, that if they had any plan or proposals to submit for an improvement of the Peninsular Mail Service, the Government was then prepared to receive and consider the same. ”

“ The insurance is at a rate of 5 per cent. on the first cost of the vessels employed, after deducting the amount already carried to depreciation account; out of which amount the premiums for insurance at Lloyd’s are paid on such assurances as are effected there, the balance being added to the insurance 69 fund. The portion of the insurance actually effected is at rather a higher rate than the 5 per cent. It would not be fair, therefore, to include any portion of this reserved fund in an estimate of the company’s profits as shipowners or mail contractors. ”

“ About the middle of the year 1839, the British Government effected a convention with the French Government, for transmitting letters and despatches to and from India, &c., overland, through France, viâ Marseilles, from whence a British Admiralty packet conveyed them to Malta. From thence this portion of the Mail, and the larger and heavier portion, forwarded by the Peninsular and Admiralty packets, viâ Gibraltar, were carried together to Alexandria by another Admiralty packet. ”

“ With respect to the propriety of the demand of £80,000 per annum the Admiralty forwarded a statement from the Accountant-general of the Navy, showing that the cost of building and equipment of the four steam vessels required for the service, under the naval regulations would be about £250,000, including £6,500 which the Admiralty added to the estimate of their Accountant-general to meet additional fittings for the necessary accommodation of passengers. ”

“ The India and Australia Company tendered for £18,450, in two vessels of 400-horse power, and one reserve of 150-horse power; the same vessel being mentioned in both tenders, as in the former one. The lowest tender was directed by the Treasury to be accepted, provided they could furnish satisfactory security for the due performance of the service they were to undertake. ”

“ If you and your friends had tendered this service for £60,000, you would have required more reasonable conditions?—I should have no objection to being bound to all reasonable conditions. The late contract for the mail to the Brazils is as it ought to be; there is no kind of trap of so many hours; the condition is simply this, the ships are to be efficient vessels. ”

“ That the Company should open an improved steam communication with India throughout, from England, within two years from the date of the Charter, or it should be null. That all steam vessels to be constructed by the Company of 400-horse power, and upwards, should be so strengthened and otherwise arranged as to carry and fire guns of the largest calibre then used in Her Majesty’s steam vessels of war. ”

“ Nothing was done by the Admiralty but to express their satisfaction that the Company had sent out an agent to Singapore, as an answer to that complaint of the Company overloading their vessels, and being out of time?—The Admiralty subsequently sent forward the letter I have read from the merchants, stating, “that their Lordships trust you have already taken steps to prevent the recurrence of the delays complained of.” The Admiralty appear to have done nothing more; the matter is still in the course of investigation; it is not yet closed ”

“ Assuming that to be the case, and that the trade has been increased by means of the steam communication with Constantinople and the Levant to the extent of about £1,000,000 sterling, that is taking the exports and imports together, £600,000 of that amount have been paid to artizans and labourers, and expended by them for the supply of their ordinary wants. And as the proportion which goes to the revenue in the shape of direct and indirect taxes is usually estimated at about twenty per cent. ”

“ The stringent conditions put into the contracts keep all honest men away?—That is going too far; I mean to say that you are asked to agree to very strict conditions, which a man cannot honestly say, “I agree to.” If the condition says that if I am half an hour behind time I shall forfeit £500, a man naturally asks himself, “Shall I enter into the contract? ”

“ First, By stipulating for a diminishing scale of payments, on the plan adopted by this Company in their Contract for the Southampton and Alexandria Mail Service. The public, by this plan, derive a benefit from any increase of income which, by the progressive development of their enterprise, the Contractors may obtain from the increase of commercial traffic. ”

“ That no less than forty new Greek mercantile establishments had been formed in this country, since the time of the establishment of those steamers. Supposing those assumptions to be correct, which I believe they are, or nearly so, I think I am warranted in forming the opinion that the revenue has been very greatly increased, inasmuch as the trade is of the most valuable nature for the employment of our artizans and labourers. The exports consist of manufactured goods of the finest class ”

“ Bond, that we should desire to conclude an arrangement with the Oriental in preference to any other company, for the present contract has 78 been loyally kept, and the capital and means of that company give better promise of efficiency and exactness than could be looked for in any other quarter. The Indian and Australian Company is indeed supported by good names, but it has yet no paid-up capital, or body of shareholders, or organised establishment on which we could depend ”

“ You stated that the Peninsular Company sent out to the China line two old vessels?—Yes, they were used in the Peninsular lines.
2317. What were their names?—The “Lady Mary Wood” was one, and the “Braganza” was the other.
2318. Are you not aware that in 1844 the “Lady Mary Wood” was only two years old?—Yes, I know it perfectly.
2319. Would you call her an old vessel?—Yes, she had been a 62 good deal used there; the best proof of her age is, that she was inefficient before she could be relieved. ”

“ The time slowed is very ample, rendering it seldom necessary to exceed a speed of eight miles per hour; and had the steamers been the superior class of vessels contracted for by the Admiralty, and ‘keeping pace with the advanced state of science,’ no difficulty in performing the passages within the specified time ought ever to be experienced. ”

“ Fourth. That for reasons hereafter suggested, the contract may now with great propriety be brought under conditions more favourable to the Government; and that this may be done either by a fixed reduction for a permanent term, or on a scale varying with the profits of the company.
In either case it will appear essential that any new arrangement to be made should rather be of a permanent than of a temporary character, both to ensure confidence to the company in the conduct and extension of their concerns, 67 and efficiency in the discharge of the service entrusted to them. ”

“ What was the subject of that memorial or letter?—The merchants represented to Sir Francis Collier the serious inconvenience which they, “and, in particular, the Canton community, have suffered, and continue to suffer, by the frequent late arrival of the steamers conveying her Majesty’s mails. The delay seems to have arisen from the steamers being generally unable to keep the time contracted for by the Admiralty, for the performance of 38 the several distances, as will be seen, we believe, by the reports sent home by the Admiralty agents, appointed to the several steamers. ”