£40,000 19.900
700
£60,600
178
17. Until the 1874-80 Contract the respective shares of cost were ascertained by means of a voluminous account prepared annually by the Imperial Post Office and audited by the India Office. The preparation and audit of this account entailed considerable labour and expense, and Lord Halifax considered that the decisions which he had given would enable the Imperial Post Office to make out an account for 1874-75, and that then it would be a simple calculation to ascertain what per- centage of the whole cost of the Mail Service for that year was chargeable to India. That percentage of the cost, in every subsequent year to the end of the contract, he decided should be paid by India. When this contract terminated, it was proposed that India should make a contribution of a fixed annual sum for the term of the next contract. To this India agreed, and the arrangement came into operation with the contract of 1880-88.
18. A copy of the account prepared by the Imperial Post Office and audited by the India Office after the Award is annexed, marked “ A.'
29
19. From the 1st February 1888, the subsidy for the Eastern Mail Service was reduced from 360,000l. to 265,000l., although a marked increase of speed was, at the instance of India, secured for the Indian mails.
20. There was some discussion as to whether the proportion of subsidy assignable to the increase of speed should not be taken into account in apportioning the cost of the service, because the colonies of Ceylon, Straits Settlements, and Hongkong, which had become contributors during the previous contracts, were not benefited in the same degree as India by the increased speed. The Indian Govern- ment urged, however, that to "graft the element of speed" upon an apportionment hitherto based on a calculation of simple mileage would constitute a departure from the system approved by the award of Lord Halifax. The matter was fully dicussed by representatives of the Treasury, the India Office, and the Post Office, with the result that Mr. Goschen (then Chancellor of the Exchequer) agreed to a compro- mise under which the Indian share of the subsidy was fixed at 40,000%. a year for the whole term of the contract, without prejudice to the claims of either party; but at that time a certain portion of the postage collected in India was also paid over
towards the cost of the service.
21. On 1st January 1891 the rate of Letter Postage between the United Kingdom and India was reduced from 5d. to 2d. Up to that time an inland rate of 1d. per ounce letter had been assigned to each side for inland service, and the balance of the collection, less the cost of the transit by special trains through France and Italy, had been treated as sea postage. This sea post- age was collected and retained by the United Kingdom on the outward Mails, and India collected it on the homeward Mails, and paid it over to the United Kingdom. The Indian contribution, therefore, represented 40,000l. plus the amount of sea postage collected in India.
22. Out of a collection of 2d. no margin was available for sea postage, and the Indian Government proposed that the division of receipts should be discontinued in favour of the Postal Union system under which, between two countries exchanging mails, no accounting for postage collections takes place but each country retains all the postage which it receives, whether prepaid upon outward correspondence or collected on the delivery of unpaid or insufficiently paid inward correspondence; and, in lieu of the contribution of sea postage which disappeared in this process, India offered to increase her main contribution by a lump sum of 19,9007. a year. This offer was accepted; and the Indian contribution was further increased by 7001. in connection with an application of the same principles to newspapers and book-packets when the postage on these was reduced to the uniform rate of d. per 2 ounces on the 1st January 1892. India continued to make a contribution of 60,6007. up to the termination of the contract on 31st January 1898.
23. The Imperial Post Office proposes that the subsidy of 245,000., applicable to the Eastern Mail Service under the new Contract, should be apportioned in accordance with the principles which have governed the apportion- ment since 1866, the procedure being as follows:
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