198
17. Until the 1880-88 contract India was the only contributor which bore a proportionate share of the loss on the Service, though in common with India the Eastern Colonies paid over to the United Kingdom the portion of their postage collections proper to the sea Service.
18. Out of the higher rates of postage then prevailing a delivery rate of 1d. per oz. was credited to India and the Eastern Colonies on each outward letter. They on the other hand deducted from their postage collections a similar rate on each homeward letter and paid over the balance to the Imperial Post Office, which after defraying the cost of transit by special trains through France and Italy, and assigning Id. per oz. to its own inland Service, applied the remainder towards the reduction of the loss on the sea Service.
19. In 1874 the Government of the Straits Settlements complained that its rates of postage to the United Kingdom were unduly high as compared with those of India. The Imperial Post Office replied that India contributed about 60,000l. a year towards the loss on the Service, whereas the Straits Settlements contributed nothing, and therefore had no equitable claim to a reduction of postage which would augment the Imperial loss.
20. The Earl of Carnarvon, then Secretary of State for the Colonies, there- upon suggested that in the commercial interests of the Straits Settlements a reduction of postage should be conceded, and that in return "the charge occasioned "by their Mail Service should be divided between the Imperial and Colonial "Governments." His Lordship further suggested that the Governments of Çey- lon and Hongkong should be invited to consider the matter from this point of
view.
21. Lord Carnarvon's suggestions did not result in a definite arrangement, but when in 1877 postage rates were reduced on the entry of the Eastern Colonies into the Postal Union, it was made a condition that they should bear one half of the additional loss thus thrown on the Imperial exchequer.
22. The question of direct contributions towards the loss on the Service thus remained in abeyance, but in 1879 the Treasury revived it in view of a new contract. An assessment of the cost of the new Service was made by the Imperial Post Office on the lines approved by Lord Halifax, and the liabilities of the Eastern Colonies were found to be as follows:
COLONY.
Ceylon,
Straits Settlements,
Hongkong,
LESS COLONIAL
GROSS SHARE OF COST.
SHARE OF SEA POSTAGE.
NET SHARE OF Cost.
£
£
£
2,721
1,321
1,400
7,071
1,071
6,000
13,771
1,071
12,700
23. The Earl of Kimberley, while agreeing in principle with his predecessor that the Eastern Colonies should share the burden with India and the United Kingdom, expressed the opinion that neither Hongkong nor the Straits Settle- ments should be called upon to pay more than Ceylon, "the wealthiest and most populous colony." Eventually his Lordship proposed a payment of 2,500/. by each of the three Colonies, but this was not approved by the Treasury.
24. A settlement as regards the 1880-88 contract was come to in 1884, when it was arranged that Ceylon should contribute 1,4007. and sea postage in accord ance with the result of the assessment; that a contribution of 6,0001. and sea postage (in lieu of 12,7001. and sea postage) should be accepted from Hongkong, and that the Straits Settlements should contribute 6,000l. in complete settlement of all postage accounts with the United Kingdom-that is to say, without handing over in addition the sea postage which had been allowed for in the assessment..
25. The compromise thus arrived at was allowed to stand throughout the term of the succeeding contract, 1888-98.