CO882-(6-8) — Page 354

£

40,000 19,900 700

60,600

10

21. On 1st January, 1891, the rate of Letter Postage between the United Kingdom and India was reduced from 5d. to 24d. Up to that time an inland rate of Id. per half ounce letter had been assigned to each side for inland service, and the balance of the collection, less the cost of the transit by special trains through France and Italy, had been treated as sea postage. This sea postage was collected and retained by the United Kingdom on the outward mails, and India collected it on the homeward mails, and paid it over to the United Kingdom. The Indian contribution, therefore, represented £40.000, plus the amount of sea postage collected in India.

22. Out of a collection of 2d, no margin was available for sen postage, and the Indian Government proposed that the division of receipts should be discontinued in favour of the Postal Union system under which, between two countries exchanging mails, no accounting for postage collections takes place, but each country retains all the postage which it receives, whether prepaid upon outward correspondence or collected on the delivery of unpaid or insufficiently paid inward correspondence; and, in lieu of the contribution of sea postage which disappeared in this process, India offered to increase her main contribution by a lump sum of £19,900 a year. This offer was accepted; and the Indian contribution was further increased by £700 in connection with an application of the same principles to newspapers and book-packets when the postage on these was reduced to the uniform rate of d. per two ounces on the 1st January, 1892. India continued to make a contribution of £60,000 up to the termination of the contract on 31st January, 1898.

23. The Imperial Post Office proposes that the subsidy of £245,000, applicable to the Eastern Mail Service under the new contract, should be apportioned in accordance with the principles which have governed the apportionment since 1866, the procedure 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-such as Egypt, Dutch East Indies, Siam, Japan, Zanzibar, East Coast of Africa, &c. The number of letters being ascertained from the latest weights 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 fortnightly 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., maila 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 apportioned to the 52 sailings provided exclusively for Indian correspondence, and the other moiety (b) is and would still be apportioned to the 32 sailings provided for the combined services.]

(F.) Divide incidental expenses, which are chiefly incurred in connection with the conveyance of mails between the United Kingdom and Brindisi, in the same proportions as the cost of the service.

(G) Deduct the extra receipts of the service (ie., sums received for sea conveyance of foreign closed mails), 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 proposes—

(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.

S. WALPOLE.

General Post Office, London,

22nd July, 1898.

MY LORDS,

11

APPENDIX B.

EASTERN MAIL SERVICE.

LORD MORLEY'S AWARD.

31, Prince's Gardens, 8.W.,

8th November, 1898.

1. In accordance with the request contained in your Lordships' letter of 20th July, I have enquired into the questions at issue between the Postmaster-General and the Secretary of State for India as to the proportion of the cost of the Eastern Mail Service to be charged to the Government of India.

2. The case of the Post Office and the case of the Indian Government, which were forwarded to me on 27th July, are annexed to this award.

3. I have had several interviews with Mr. J. J. Cardin, C.B., representing the Post Office, and Mr. H. M. Kisch, the Postmaster-General of Bengal, who have argued the cases of their respective Governments before me.

4. Since Lord Halifax's award in 1876 circumstances have considerably changed, and on the occasion of each subsequent contract the Indian Government has raised questions of importance which have never been definitely settled. During the two contracts, from 1880 to the present time, the Indian contribution to the Mail Service has been fixed by a series of compromises, the details of which are given in the two cases. It was, therefore, necessary for me to go very fully into the principles which have regulated the apportion- ment of the cost of the service between the two countries.

5. On the conclusion of a new contract with the Peninsular and Oriental Company for the conveyance of the Eastern and Australian Mails for seven years from 1st February, 1898, the Post Office made the following proposals :—

(a.) That of the total subsidy of £330,000, £85,000 ahould be regarded as applicable to the Australian Sørvice, leaving £245,000 to be taken as the cost of the Indian and Eastern Service.

(b.) That each country should retain its own collection of postage as they have done

since 1891.

(c.) That the cost of each of the seven sections into which the mail route is divided, should be ascertained by dividing the subsidy in proportion to the unnual mileage of each section. That one half the cost of the section should be charged to the United Kingdom, the other half should be paid by India and the various Colonies interested, in proportion to the number of letters sent and received by them, the United Kingdom paying for any letters which it exchanges with other countries.

That the incidental expenses should be divided in the same proportions as the cost of the Service, and that the amounts received for sea postage on foreign mails should be divided between the contributing countries in the proportion which each bears of the cost of the service. In its main principles, this is the mode in which the apportionment has been hitherto adjusted.

6. The Indian Government objects to these proposals on the following grounds :-

(a.) That the amount (£85,000) appropriated to the Australian Service is too small. (b.) That India should not be charged with any portion of the loss accruing on the

sections between Colombo and Shanghai.

(c.) That, if each Administration retains its postal collection, the share of the subsidy charged to India is too large, having regard to the fact that the mails from England to India are far heavier than the mails from India to England.

The discrepancy between the homeward and outward traffic in lettera is not very great; but England sends to India about six times as many newspapers, circulars, &c., as she receives. The following figures for the year 1896-97 were given to me :-

From the

United Kingdom,

From India and Aden.

Lbs.

Lbs,

Letters and postcards

96,300

89,800

Newspapers, oirculars, ac.

1,581,200

259,400

19396

B 2

PUBLIC RECORD

OFFICE

Reference :-

TIPC.O. 882

8 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

12

The result, it is argued, is that the United Kingdom makes more use of the Service than India, and also that the United Kingdom has the advantage of the larger collection of postage, whereas India has to bear the expense of distributing the heavier mails.

7. To meet this case, the Indian Government suggests that a new principle should be adopted, viz., that the Postal Union rules should be applied to the sea-transit, as if it were provided by a foreign government, and that Postal Union rates should be charged on all mails to the sending country,

As an alternative scheme it is stated in the Indian case (page XIII.) that "India would be prepared to return to the arrangement for the pooling of postage and sea-postage which was in force from 1857 to 1891."

8. The Post Office, on the other hand, states that if the principles of Lord Halifax's settlement are re-opened, there are various claims which can be equitably raised against India, which have not thus far been pressed, 6.g. :—-

(a.) The cost of extra speed on the Bombay Line;

(b) The cost of sea sorting (£7,500), which, it is alleged, was established at the

instance and for the benefit of India.

9. After a careful consideration of the two cases, and of the arguments used in support

of them, I have arrived at the following conclusions:-

(a.) That, as regards the Australian Service, the arrangement proposed by the Post Office should be adopted during the continuance of the contract, and that £85,000 should be appropriated to that service. When the present contract expires, it appears to me 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 those sections, but that she should pay transit rates for any use she may make of this portion of the mail route, the receipts 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 ou the Bombay line, which, by Article 35 of the contract, is fixed at £7,500.

Under this Article the Postmaster-General may give notice to the Company that he no longer requires provision to be made for sea-sorting, and may dednet £7,500 from the subsidy. I understand that he would be willing to give this notice if the Indian Government desires him to do so.

(e.) That an account should be prepared by the Imperial Post Office and audited by the India Office, and that the amounts thus ascertained shall be payable by the contributing countries to the end of the contract,

1 bave the honour to be,

My Lords,

Your obedient Servant,

1

The Lords Commissioners of

Her Majesty's Treasury.

(Signed)