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PUBLIC RECORD OFFICE

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CO. 885

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PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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the difficulties arising from the Brisbane suggestions, while the Canadian Pacific scheme would doubtless be considerably advanced, and the financial situation both here and in the Colonies might have become more favourable.

Even if other suggestions could be adopted unhesitatingly, a term of seven years proposed by the Brisbane Conference for any new contract or contracts would be open to very grave objections, and so would the shorter term of five years alternatively proposed by the Wellington Conference, of whose resolutions we have as yet only telegraphed reports. In the present state of steam communication with the various parts of the Empire in the East, it is greatly to be desired that no one section of the packet service of the future should be prejudiced, when the time comes for revision, by the fact that other sections have still a term to run.

APPOINTMENT OF AN INTER-DEPARTMENTAL COMMITTEE IN LONDON ON EASTERN MAIL SERVICE.

While the Colonies were preparing to discuss the matter at a fresh Conference, the proceedings of which are daily expected from Wellington, the Home Government decided to appoint an Inter-Departmental Committee to consider the whole subject of mail communication with the East, and, first of all, the pressing question whether new contracts for the Australian Service should be arranged at once independently of any general settlement.

To this Committee, formed of representatives of the Treasury, India Office, Colonial Office, and Post Office, and presided over by the Right Hon. W. L. Jackson, M.P., the moment seemed singularly unfavourable for attempting to arrange fresh contracts. The state of commerce of and with Australia precludes the hope of effective competition in the shipping trade, at all events for some time to come, and it is thought that an attempt to obtain tenders might result in such a combination of interests as would necessitate a large increase of subsidy.

In the course of the next three years the commercial situation may have greatly improved and the further development of the Canadian Pacific route may afford another element of strength to the Government in dealing with the Australian mail question.

As regards the India and China Service there is this consideration: if the Peninsular and Oriental Company, which at present performs both that and a fortnightly Australian Service, should have obtained a fresh contract for seven years on the lines suggested at the Colonial Conferences, their India and China contract, which terminates in 1899, will lapse at a moment more fortunate for them than for the Government. For, if tenders be then invited for a Service to India and one to China vid Ceylon, this particular Company will be already performing a service identical, as far as Ceylon, with the China Service; and the fact that they will thus have a secure footing for four years over so considerable a portion of the route must be an element of strength to the contractors and of weakness to the Government, especially if, as is by no means unlikely, the Company should have succeeded in obtaining a higher subsidy than at present for the Australian service.

Considering how important a position this one Company occupies in Eastern commerce it is difficult to regard as other than prejudicial to the public interest anything which tends to lessen to them the dangers of competition at the time when their main contract runs out, seeing that any strengthening of the Peninsular and Oriental Company for the competition of 1898 could scarcely fail to drive up the cost of the whole service to various parts of the East. As regards the negotiations with the Australian Colonies experience teaches that there is every probability of their lasting so long as to make a hasty decision almost a necessity, if fresh contracts are to be arranged and in operation even by January 1896. The Colonies, in formulating their proposals, can scarcely have overlooked the fact that, if they could induce the Imperial Government to commit itself to new contracts for the service while the question of apportionment of cost was still under discussion, they might feel some confidence in obtaining their own terms, because it is the Imperial Government that makes the contracts, and is bound by them, and will have to pay the subsidies whatever it may ultimately arrange to accept as their contribution.

The resolutions of the Colonial Conference point to many modifications of practice. Among these is a proposal to advertise for tenders both in this country and in Australia. The mere settlement of the forms of notice and conditions of tenders with the Australian processes Post Offices would alone occupy many months; and to get through the several

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necessary under the newly-broached conditions would, it is thought, be practically impossible in the interval likely to be at command. It is hopeless to think of dealing with such a complex question as this in concert with the Australian authorities in a short time; and how little likely those authorities are to be satisfied with the results of an attempt made to settle such a matter on other lines than those which they desire, experience shows.

For these and other reasons the Inter-Departmental Committee is convinced that the best plan of action is to prolong the present Australian service till the 31st of January 1898 and to take advantage of the interval to consider in the most deliberate manner the subject of Australian mails both on its own merits and in connection with the entire question of the Eastern Mail Services.

The utmost importance is attached by Her Majesty's Government to the fact that any new contracts negotiated now would, as a matter of course, be for a period overlapping that which the India and China Contract has to run, whereas if we are to obtain in the future the most advantageous services to and from the whole East we must not, at the time of their arrangement, be bound to a particular way of serving any one section.

The Government cannot well move further in the direction of prolonging for two years more the present contracts without the consent of the Colonies, which participate in the cost of the service, and, seeing that the Wellington resolutions concerning the "Federal Mail Service," as telegraphed, do not indicate whether the Colonies are prepared for its further extension till the 31st of January 1898, the Postmaster-General has communicated urgently with the Colonial Post Offices on this point.

With reference to the Wellington resolution in favour of a new federal contract of five or seven years' duration he has stated that, if either of the terms in question were to be counted from the 1st of February 1898 it is possible, though no promise to that effect can be given, that Her Majesty's Government might consent to renew the "Federal Service," under fresh conditions to be carefully debated and settled in the interim; but that the Committee of Home Government Departments referred to above is unanimously opposed to any fresh contract for the Australian service overlapping the term of the present India and China service.

The Colonies have been told that Her Majesty's Government attaches great impor- tance to the consideration that, if we are to obtain in the future the most advantageous service to and from the whole East, including Australasia, we must not, at the time of their settlement, be bound to a particular way of serving any one section, or hand over to any competitor so strong a weapon as an assured subsidy over a considerable portion of the system. And a "firm offer" has been made to them definitely to conclude arrangements for prolonging the federal service in all its present conditions till the 31st of January 1898, on the ground that if this were done, there would be ample time for fully considering all the important points arising out of the wishes of the Colonies in regard to the future.

THE CANADIAN PACIFIC SCHEME.

The Canadian Pacific Scheme was subsidized under the Imperial contract of July 1889, less on account of any immediate benefits expected from it than on grounds of possible advantage in altered circumstances. On postal grounds alone the subsidy would scarcely have been justifiable; but even from that point of view it is of great contingent value as offering an alternative route. The eastern route to Hong Kong has the advantage in point of time, so long as it can be kept open. With an efficient Atlantic service the western route to Shanghai may prove the quicker. To Yokohama the western route is certainly the better. To Australia the Vancouver route is not advantageous at present for mails from this country, though it is to Fiji, and to New Zealand it would be if the packets went there. But the advantages of this route through our own dominions in the west to our own dominions in the east are dependent on the establishment of an efficient service across the Atlantic, to and from Canada; and it was

a part of the understanding with the Canadian Government when we entered into the scheme, that Canada should set up at her own cost a first class Atlantic service in place of the slow service of the Allan line. Time went on without the Dominion finding itself in a position to fulfil this pledge, till at length, at the beginning of 1892, application was made by Canada to Her Majesty's Government to help in subsidising the required Atlantic line. Up to now, the Government has not in any way pledged itself to give

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