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PUBLIC RECORD OFFICE

C.O.

Reference :-

8855 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

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owing to some competitor taking a more sanguine view of the commercial possibilities of the case than our experience warranted us in taking. We therefore gave the point special con- sideration, and in naming 768 hours as the time between Naples and Adelaide (including stoppages for all purposes on the way) we provided for the highest speed which we felt we could prudently undertake to maintain on every voyage, and under all circumstances, over a term of years. During the nine months which have elapsed since that tender was submitted we have instructed the captain of the S.S. Orient" to accelerate the delivery of the mails between Naples and Adelaide each way by two days (ie., in 31 days instead of 33 days), and the result has been that the cost of such acceleration was 1,3007. in coals alone for the round voyage, apart from extra cost of overhaul of machinery at the end of the voyage, which is considerable, and other expenses incidental to accelerated speed.

24

We would here remark that the price of coals is at present extremely low at all coaling stations, and that during the term of the proposed contract it will likely be much increased. In tendering for 32 days we conceded one of the two days just referred to, and our object in mentioning the above facts is to illustrate the great additional cost involved in increase of rate of speed over an already high rate. As you are no doubt aware the resistance offered by the water to a ship's progress increases in the ratio of the cube of the velocity, and consequently the cost of accelerating from 32 days to 30 days would be much greater than that of accelerating from 33 to 31 days. We trust we will be forgiven for recalling also the obvious consideration that in comparing the mean rate of speed for an Atlantic service, for example, due allowance must be made for the necessity on the Australian route of coaling by the way, and for the deteriorating influence of tropical heat on coals which materially increases the quantity needed in order to maintain a given speed. This not only affects the cost of steaming but also the steaming power, the endurance of the stokers being severely taxed on a voyage so long and trying. Neither of these limitations apply on the Atlantic. not therefore, without a largely increased subsidy, undertake to deliver the mails in less than We could 32 days on all occasions. While we say this we would beg to remind you that in the past our steamers have, as a rule, considerably exceeded the contract speed, and it will no doubt be to our interest in the future also to keep pace with the times, improving in speed with cach vessel added to the line, for which improvement the Governments, under the proposed contract, would not be called upon to pay any premiums.

As to the period of contract, we are still of opinion that for so onerous a contract involving the permanent investment of large capital, 10 years is no more than a reasonable period, five years being altogether inadequate and not presenting sufficient inducement to develop such a mail service as both parties to the contract would desire. In deference, however, to the views of the Colonies on this point, supported by the Postmaster General, we are prepared to reduce the term to eight years.

Our amended tender will therefore be as follows :—

PRICE-Twelve shillings per pound for letters.

Sixpence per pound for other mail matter.

And 5507. per voyage each way.

PERIOD OF CONTRACT-Eight years from 1st February 1888.

TIME FROM ADELAIDE TO NAPLES, and vice versa―Thirty-two days.

subject to the conditions of our tender of 30th April 1886, and of the advertisement on which it was based.

The Secretary,

SIB,

General Post Office, London.

We have, &c.

For the Managers, (Signed) S. WAYMOUTH,

Secretary,

Appendix III. to No. 24.

Peninsular and Oriental Steam Navigation Company, Offices, 122, Leadenhall Street, Londou, E.Ć.

February 18, 1887.

I AM now desired to inform you that at the meeting of the Board to-day, full particulars were submitted by the managing directors as to the Conference which took place at the Post Office in reference to the position of the Australian mail tenders.

The directors having duly considered the representations made by the Agents General in reference to the wishes of the Colonies, more particularly for a shorter term of contract than that tendered by the Company, deeply regret that they are unable to make a tender

5.)

for a shorter period except at a relatively higher rate than that already submitted. The directors understand that it is not the wish of the Colonies to pay a higher rate in consideration of a shorter term, and under these circumstances, it seems needless to make any proposition in that direction. The directors have already so fully explained the impossibility of entering into a contract involving a vast outlay for so short a time as five years, except at an abnormally high rate in comparison with what a fairor term of service would render sufficient, that any further remarks on the subject would seem to be superfluous. I would venture, however, to remind you that in holding this view the directors are not advancing any new opinion, but that they have acted precisely on the same lines with respect to their tenders for the India and China mail services.

The view of the Colonies with regard to a short period of contract is quite intelligible; but, as pointed out by Mr. Sutherland at the Conference, it has no real foundation, because it is impossible for a mail company to drop behind the progress of the day without losing its claim to six sevenths of its revenue.

The subsidy will never keep a mail company in a remunerative, or even a solvent position, unless its enterprise is completely abreast of surrounding progress. This fact constitutes the guarantee of the State in fixing the period of a mail service for a term proportioned, in some fair degree, to the risks connected with the service, and the outlay which it must entail. If it be sought, therefore, to increase these risks by reducing the period which the contractors have at their disposal, in order in some measure to cover their outlay, it is clear that the cost of the service must be proportionately higher.

Under these circumstances and having regard to the facts already put forward by the directors in the previous correspondence on this subject, I am requested to state that the directors do not see their way to vary the proposal last submitted to you for the Australian mail service. I am, at the same time, to point out that the directors would be willing to make the term of contract anything within seven and 10 years, with corresponding sliding scale alteration in the amounts of the subsidy as tendered for on the basis of these respective periods.

In the event of the Company's proposal, being accepted, the directors would have to stipulate that the English mail steaners of this company should not be placed by any of the Colonies on a less favourable footing as regards port dues or other public charges than any of the vessels engaged in mail services under the French, German, or any other foreign flag.

The Secretary,

SIR,

General Post Office, E.C.

I am,

(Signed)

Appendix IV. to No. 24.

&c.

A. M. BETHUNE,

Secretary.

Orient Steam Navigation Company, Limited,

13, Fenchurch Avenue, E.C.,

London, February 18, 1887.

REFERRING to our interview with you and the Agents General for New South Wales, Victoria, and South Australia, at the General Post Office, on the 14th instant, we should prefer to adhere to the terms of our amended tender, dated the 19th ultimo; but in deference to the wishes expressed at the Conference, we are prepared, in substitution for payment partly by poundage rates and partly by fixed sum, to accept payment entirely by fixed sum.

We understood Mr. Sutherland to say, at the Conference, that the Peninsular and Oriental Company require payment at the rate of

85,000 per annum for a contract of ten years' duration; or

100,000 per annum for one of seven years' duration.

Taking this as a basis, we would be prepared to accept a fairly proportionate fixed payment for a contract of eight years' duration.

We must, however, stipulate that the mail steamers of the line shall not be placed on a less favourable footing as regards port and light dues, or other public charges, in any of the Colonial ports, than any other ocean steamers trading with the samo ports.

All other details to remain as set forth in our previous letter.

The Secretary,

General Post Office, London.

H 2

We have, &c.

For the Managers, (Signed) S. WAYMOUTH,

Secretary.