186
6. The Secretary of State is aware that, in the course of the arbitration pro- ceedings, the British representative urged that India should not obtain the carriage of her despatches to the Continent of Europe in return for only an increased charge in the subsidy account, in respect of those mails. On the other hand, the Indian representative urged that the unequal services obtained by the several contributors from the non-contract extensions of the mail lines should be provided for. Neither of these matters is mentioned in the award, but the Secretary of State, accepting the award in its entirety, understands that these and all other matters, not otherwise provided for, are treated by the Arbitrator as set off against each other, and cover- ed by the accepted principle of paragraph 24 (1) (now 27 (1)) of the British case.
7. In discussing the steps to be taken to give effect to the award, and its application to the details of so complicated a subject as the account in connection with the charges and profits of the P. & O. Company's service, a number of questions necessarily arose besides the one which forms the subject of this letter. On all these questions a friendly understanding has been established between Her Majesty's Postmaster General and the Secretary of State in accordance with the principles of the award; and, as there is only one point on which there is any difference of opinion, the Secretary of State now suggests, as a settlement of that point, that, in respect of foreign mails from India for countries other than the United Kingdom, passing over the line Bombay-Brindisi, India should, according to the principle of the old system of pooling, divide equally with the United Kingdom sea postage at the usual (Union) rates on the quantities actually sent, the pooling of entire postage being then restricted to mails between the two coun- tries. Lord George Hamilton hopes that this suggestion will save any further trouble regarding the interpretation of Clause (c.), either now or hereafter when the account is prepared.
8. In the event of their Lordships being unable to accept either the Secretary of State's interpretation of Clause (c.) of the award, or the proposal in the preceding paragraph of this letter, Lord George Hamilton can only suggest that the question be referred to Lord Morley. The Secretary of State would ask that, in that case, a copy of this letter be forwarded to Lord Morley, and that a copy of the letter of reference, and any communication that may be submitted to Lord Morley in support of the contention of the British Post Office, may at the same time be forwarded to this Office.
I have the honour to be, Sir,
Your obedient Servant,
The Secretary
to the Treasury.
(Signed)
HORACE Walpole,
(2nd Enclosure.)
(a) Extract from Post Office Letter to India Office, dated 28th July 1899.
The exception taken by the Secretary of State to the construction placed by the Post Office upon Clause (c.) of the award may perhaps be removed if the follow- ing points are considered :-
(1) Such pooling as formerly obtained was abandoned at the instance of India; and the re-introduction of pooling formed no part of the Post Office case presented to the Arbitrator.
(2) Lord Morley, however, favoured pooling; and, from the wording of the award and the fact that he brought land transit rates within its scope, it is clear that he contemplated a wider application of the pooling principle than that in force from 1857 to 1891.
(3) The United Kingdom, which bears in the first instance an equal share of cost with each contributor, has to pool with that contributor the receipts on all mails which determine the particular proportion of eost assignable. It cannot share with India the receipts on mails exchanged with Ceylon, the Straits Settlements, or Hongkong; and it is presumed the Secretary of State does not hold that the receipts on mails exchanged between the