15. It has been ascertained from the Admiralty that the approximate relative cost of coal used in steaming at 145, 13.7 and 12.6 knots is 131, 117, and 100. Coal being the largest item of expendi- ture, it is submitted that the case of the Eastern Colonies is not overstated if the relative cost per mile over the Brindisi- Bombay sections, the Aden-Adelaide sections, and the Colombo-Shanghai sec- tions, is estimated at 128, 115, and 100. The cost of the various sections, correct- ed on this basis, works out as shown in the fifth column of Appendix G (where the ratios 109, 98, and $5 have been taken instead of the equivalent ratios 128, 115, and 100, so as to make the total cost come to the same figure as be- fore, 321,5001). The remaining columns of Appendix G give the approximate share of the subsidy which should be paid by the various Colonies and India, when difference in speed is thus taken into account, viz., India, 62,420.; Ceylon, 2,625.; Straits Settlements, 5,3457.; Hongkong, 9,6071.; and Aus- tralia about 54,0007.
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The ratios 131, 117, and 100 furnish- ed by the Admiralty are understood to be based on the general formula that on any ship the cousumption of coal for steaming at various rates is proportion- ate to the square of the several speeds. If the assessment were to be based ou these figures. it would be necessary to inquire whether the formula is accurate when applied to the particular ships and the particular rates of speed in question; but apart from this, it is to be noted that the Colonial Office has applied the ratios as if coal were substantially the only item of expense in the maintenance of a fleet. The Company's Statement of Accounts for 1903 shows their expendi- ture on coal to have been 634.0007. out of a total of 3,100,000. including 520,000l. for Interest on Capital, Reserve Account and Surplus.
But even this expenditure of 634,0007. needs discounting to the extent of at least 10 per cent., to allow for the cost of coal consumed on board for purposes other than that of speed, e.g., electric lightings, heating, ventilation, refrigera tion, &c., &c. The expense for coal consumed for propulsion is therefore 10 per cent. less than 634,0001. or 570,000Z. and 570,0001, is only about 18 per cent. of the Company's expenditure as shown above. The ratios in excess of the mi- nimum of 100 need therefore to be re- duced by 82 per cent., and the result is a reduction of the higher ratios from 131, 117, and 100, to 106, 103, and 100.
But there is also an actual economy to the Company from the increased speed in respect of the pay of commanders, officers, and crews, and of the provisioning of the passengers, commanders, officers, and crews. These items of expense amount to 627,000l., and in order to arrive at an equitable result there should be a mate- rial reduction in the amended ratios (106, 103, and 100).
A further correction must be applied in any attempt to arrive at the cost of Indian and Eastern Services on a basis other than that of mileage. Coal suppli- ed to the Colombo-Shanghai steamers in- curs higher expense for freight, and as these steamers do not come home their coal must be carried to them. It is stated that the cost of Welsh steam coal at Hongkong is at present 3 s. per ton, as compared with 14s. in England. If the steamers on the Eastern section use Japanese coal the price would not be so high, but that coal is stated to be 25 per cent. inferior to Welsh coul in steam power.
In these circumstances the Imperial Post Office submits that the Contract rates of speed should not be taken into