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Appendix VII.
REJOINDER OF THE IMPERIAL POST OFFICE TO THE CASE OF THE EASTERN COLONIES, SUBMITTED TO THE RIGHT
HONOURABLE LORD BALFOUR OF BURLEIGH.
INCLUSION OF AUSTRALIAN SERVICE IN THE ASSESSMENT.
QUOTATION FROM THE COLONIAL OFFICE CASE.
11. It is contended that as the tender of, and contract with, the Peninsular and Oriental Coinpany was for the com- bined Indian and Eastern and Austra- lian Mail Service, and not a sectional tender and contract, whatever principles of apportionment may be adopted should be applied throughout, and not limited to the Indian and Eastern sections. The share of the subsidy payable by the United Kingdom and Australia towards the Australian section has, bowever, been fixed at 85,000l. without any regard to the mileage principle. This sum has been taken because it is the amount paid to the Orient Company for its Australian Service, but it is submitted that the cost of the Australian section should be calculated according to the mileage prin- ciple, if that principle is to be applied to the rest of the service. If this were done the division of the cost of the subsidy into sections would work out as shown in the first five columns of Appendix F.
REJOINDER OF THE POST OFFICE.
On reference to paragraphs 1 to 9 of the Case of the Imperial Post Office it will be seen that the share of the subsidy proper to the Australian section has been taken at 85,000l., not merely because that is the amount now paid to the Orient Company under its contem- porary contract for the Australian service, but also because that was the amount paid to each of the two Packet Com- pauies (P. and O., and Orient) for the same service under contracts which expired in 1898, and which were abso- lutely distinct from the Indian and Eastern Mail Service contract.
It is incontrovertible that so long as there were two contracts with the P. and . Company, the cost of the Eastern and Australian services was 265,000. and $5,0007. respectively, and that when the P. and O. contracts were combined, the Orient Company continued to perform the Australian service at the old rate of subsidy. By combining the P. and O. services under one contract a reduction of the subsidy by 20.0007. was effected, but in view of the failure to obtain any reduction in the Orient contract, the saving on the P. and O. service was wholly allocated to the Eastern service
-au arrangement which did not pass without criticism from the Australian Colónies.
Reference to the Directors of the P. and O. Company produced the response (al- ready quoted in paragraph 7 of the case of the Imperial Post Office) that it would be impossible to separate the sections as desired, but that the Directors had always had in view that they should obtain the sum of 85,000l. for the Australian por- tion of the work, and that, out of the total subsidy, the sum of 245,0007. was for the Eastern Mail Service.
If as contended by the Colonial Office the Australian Colonies should be assessed on the same lines as India and the Estern Colonies, then the Australian Colonies might well claim that Ceylon should bear her share of the loss on the Orient Company's service, instead of merely paying Postal Union Rates of sea transit.