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PUBLIC RECORD OFFICE

Reference :--

TLC.O. 882

8PUBLIC RECORD OFFICE, LONDON

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part in the arbitration and had no opportunity of stating their case or of being heard by the arbitrator, object to the proposal of the Treasury to extend to them without qualification the principles of apportionment laid down by Lord Morley as between His Majesty's Government and the Government of India.

4. The Imperial Post Office proposed in their case as submitted to Lord Morley (the full text of which is given in Appendix A.) that £85,000 of the total subsidy should be regarded as the cost of the Australian section and (par. 23) :

"that the subsidy of £245,000 applicable to the Eastern Mail Service. ... should be apportioned in accordance with the principles which have governed the apportionment since 1866, the pro- cedure being as follows:-

"(A) Divide the service into the following sections, corresponding to the principal points of call :-

Brindisi and Port Said.

Port Said and Aden,

Aden and Bombay.

Aden and Colombo.

Colombo and Singapore.

Singapore and Hong Kong.

Hong Kong and Shanghai.

"(B) Ascertain the number of miles traversed annually upon each section of the service by multiplying the length of each section by the number of voyages performed annually,

"(C) Ascertain the cost of each section by dividing the subsidy in proportion to the annual mileage of the section.

"(D) Charge one half the cost of each section to the United Kingdom.

"(E) Divide the other half of the cost of each section proportionately, charging India, Ceylon, Straits Settlements, and Hong Kong according to the number of letters sent and received by them, and charging the United Kingdom with the letters which it sends to and receives from other places— anch as Egypt, Dutch East Indies, Siam, Japan, Zanzibar, East Coast of Africa, &c. The number of letters being ascertained from the latest weighta procurable, and the average number per pound weight being ascertained by means of special returns agreed upon by each office, as on previous occasions.

"It is because India is provided with a weekly mail service, and Ceylon, &c., only with a fort- nightly mail service, that the sections, Brindisi- Port Said, and Port Said-Aden, over which the Indian Mails are annually conveyed 104 times, and the Ceylon, &c., mails 52 times, have to be subdivided in order to ascertain the respective charges assignable. One moiety (a) of the cost of each of these sections is and would still be appor- tioned to the 52 sailings provided exclusively for Indian correspondence, and the other moiety (b) is and would still be apportioned to the 52 sailings provided for the combined services.]

"(F) Divide incidental expenses, which are chiefly incurred in connection with the convey- ance of the mails between the United Kingdom and Brindisi, in the same proportions as the coat of the service.

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"(G) Deduct the extra receipts of the service

(1.8., sums received for ses conveyance of foreign closed maila) sharing the amount between the contributing parties in the proportion which each bears of the cost of the service.

"24. The Imperial Post Office further pro- poses--

"(1) That each Administration contributing its full share of the cost assessed as above indicated, shall make no further payment in respect of mails despatched by it over the service, and shall be credited with a proportionate share of the amount of any penalties inflicted upon the Packet Company in respect of the Eastern Mail Service; and

(2) That when the principles are decided by the Arbitrator, an account shall be prepared by the Imperial Post Office and audited by the India Office, the amounts thus ascertained to- be payable by India, &c., to the end of the present contract."

5. Lord Morley's Award (the full text of which is given in Appendix B.) was to the following effect :-

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(a) That, as regards the Australian Ser- vice, the arrangement proposed by the Post Office should be adopted during the continuance of the contract, and that £85,000 should be appro- priated to that service. When the present contract expires, it appears to ine that it would be desirable to enter into separate contracts for the two services.

(b) That, as regards the sections between Colombo and Shanghai, India should not continue to be made liable for any loss which may be incurred on these sections, but that she should pay transit rates for any use she may make of this portion of the mail route, the receipt from such transit rates being credited to the sections.

(c) That the postage collected in the two countries, and the receipts from other Administrations for land and sea transit on mails sent over the line should be pooled. and the balance of the united collections, after deducting the cost of continental transit and rates paid to other countries, should be equally divided.

(d) That, subject to the above-mentioned conditions, the apportionment of the subsidy, £245,000, should be regulated in accordance with the principles laid down in paragraphs 23 and 24 of the case of the Post Office, with this exception, that the Indian Government should bear the whole expense of sea- sorting on the Bombay line, which, by Article 35 of the contract, is fixed at £7,500.

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