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

statement annexed, marked 'B.",

Brindisi and Port Said.

Port Said and Aden.

Column 1.

Aden and Bombay..

Aden and Colombo.

Colombo and Singapore.

Singapore and Hongkong.

Hongkong and Shanghai.

(B.) Ascertain the number of miles traversed annually upon each section of Columns 2, the service by multiplying the length of each section by the number of voyages 8 and 4. performed annually.

(C.) Ascertain the cost of each section by dividing the subsidy in proportion colama 3. to the annual mileage of the section.

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

Columns 6

and 7.

(E.) Divide the other half of the cost of each section proportionately, charg- Columns 8 ing India, Ceylon, Straits Settlements, and Hongkong according to the number of to 17. 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 num- ber 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. mails 52 times, have to be subdivided in order to ascertain the re- spective 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 () is and would still be apportioned to the 52 sailings provided for the combined services.]

(F.) Divide incidental expenses, which are chiefly incurred in connexion with the conveyance of the 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.

eral Post Office, London,

22nd July, 1898.

S. WALPOLE.