Paras. 4 & 5.
Para. 6.
Para. 7.
Last paragraph.
206
This argument in these paragraphs is somewhat misleading. We are not concerned with the gross cost of the service to the Company but with the cost of the service to the Government, viz. :-the amount of the subsidy, which is about one-ninth of the Company's total receipts. As practically the only condition im- posed on the Company by the Contract was regularity and a certain minimum speed, it is fair to argue that the subsidy is intended to meet the addition to the cost of the already existing service, caused by the requirements of the Contract in the matter of speed.
There is practically no economy to the Company in respect of the pay of Commanders &c., unless the increased speed is so great that a less number of steamers could effect the same number of voyages, since the officers and the ter part of the crew at any rate are presumably paid all the year round and not merely for the period of the voyages.
grea.
As regards provisions the Company doubtless considers this item in fixing the passengers' fares, which are not fixed in the Contract and are altered from time to time.
The figures quoted as to the relative cost of Welsh steam coal appear to be somewhat exaggerated, as it is understood that the approximate rate when the ordinary cost of coal at the London Docks is about 20s., is about 35s. 6d. at Hong- kong. It is, however, of course true that the price of coal on the Eastern section is materially higher than on the sections to Bombay, but over against this may be set the fact that the depreciation and insurance of the much smaller steaners on the Shanghai-Colombo section of the service are much less than those incurred in connection with the larger steamers used on the earlier sections.
In any case, the fact remains that the Straits and Hongkong have to put up with a slower service and smaller boats between Colombo and Shanghai than are provided from Europe to Bombay and Colombo; and it is submitted that if an equally slow service were provided t› Bombay the saving to the Company would be considerable, and the Colonial Office still contends that this saving is approxi- mately represented by the ratios adopted in paragraph 15 of the Colonial Office case.
FOREIGN CLOSED MAILS.
As the Post Office do not object in principle to the suggestion made in the Colonial Office case, it is hoped that the concession will be allowed.
Extended CONTRACT.
If the allowance for speed claimed in Appendix G. to the Colonial Office case is not granted to the extent there claimed, it is contended that the whole of the extra £10,000 should be added to the cost of the sections up to Colombo, a some- what larger proportion being added to the sections to Bombay than to that be- tween Aden and Colombo, and that nothing should be added to the sections between Colombo and Shanghai since there is no appreciable reduction in the contract time between Colombo and Shanghai.
As to (1) the trade of the Straits with China is about th of its total trade while the Indian trade is nearly as great-th, so that the argument does not apply, at any rate, to the Straits Settlements.
Hongkong is of course more closely associated with China but practically the whole of the Hongkong trade is an entrepot trade and the Colonial revenues derive no direct benefit from the enormous passing trade since there are no Customs duties, and when, a few years ago, an attempt was made to raise a slightly increas- ed revenue from shipping and harbour dues, the English Ship-owners led by the P. & . Company made such representations to the Colonial Office that the pro- posal was abandoned.
Regular communication between Shanghai and Hongkong is not solely dependent upon the P. & ().
(2) This point has already been dealt with.
19th November, 1904.
(Sd) GEORGE W. JOHNSON.