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Number 2 was, however, simply a renewal of principles affirmed on a former occasion by Lord Halifax (G.P.O. case, paragraph 16).

11. The difficulty of deciding the question submitted to me arises in no small degree from the fact that, while the Colonial Office does not accept the justice of the principles by which the Australian contribution of £85,000 and the Indian contribution of £59,330 have been fixed, yet neither of these sums is open to argu- ment before me, and it is obviously no part of my duty to express any opinion.

12. The Australian contribution has been settled on grounds only applicable to that particular part of the case, while the contribution of India has been mainly decided by an apportionment of cost in accordance with the volume of the traffic; it is thus not possible, in the position in which I am placed, to come to a decision which will apply the same principles all round in each case.

13. Tested by the principles applied to India under Lord Morley's award, the Australian contribution would be obviously much too small, and it is not surpris- ing, under these circumstances, that the Eastern Colonies should demur to the justice of the principles adopted, although it seems to me that, in the argument of the Colonial Office, insufficient weight is given to the fact that the Australian service is subject to competition between two powerful companies, and is, there- fore, likely to be done for them at lowest margin of cost, whereas the service to the Eastern Colonies is more or less the subject of a monopoly.

14. It is obvious that I must assume that the Australian contribution is fixed, and that the contribution of India is also settled, even although the Eastern Colo- nies were not represented before Lord Morley.

15. The difficulty involved was, however, clearly present to his mind because (paragraph 9, sub-section (a), of his award) he says that when the present con- tract expires" It appears to me that it would be desirable to enter into separate contracts for the two services."

16. Under the circumstances as they are put before me, I am not surprised that the suggestion should have been made to endeavour to find a principle of apportionment by the cost incurred, but it is obvious that the only source from which an accurate division of cost can have been obtained is from the Peninsular and Oriental Company itself. As I have already pointed out, the Company has professed its inability to undertake the task, and it is obvious that if they cannot do it, no one else can make the attempt.

17. The Colonial Office have suggested taking into consideration the ques- tion of speed, but for the same reason that it is not possible for me to ascertain the cost of the whole service, I do not feel able to arrive at the cost of one rate of speed as compared with another, and I think that any one who reads carefully the suggestion of the Colonial Office with the rejoinder of the Post Office on this point will come to the same conclusion which I have done, that it is not possible to make any fair apportionment based on the principle of speed, and I, therefore, reject, as a basis for consi leration, the figures in Appendix G. of the case of the Eastern Colonies, but it does not follow, and I do not intend it to be understood as my opinion, that such questions as that of speel, size of boats employed, and other similar considerations, should be left altogether out of sight.

Mr. Johnson urged strongly upon me that the Secretary of State only agreed to the matter being submitted to arbitration on the distinct condition "that the Colonies are not to be prejudiced by the assumption that £85,000 is the proper amount to be assessed to the Australian portion of the contract or that India's share is fairly assessed under Lord Morley's award," and that the Treasury did not demur to this. He therefore urged that the only fair way to arrive at a settle- ment of the portion of the subsidy to be paid by the three Eastern Colonies is to find some uniform system and to see how it would work out if applied to India and Australia. He represented that if this were done on the basis set forth in Appendix F. of their case, that it should not be taken as judging the cases of India and Australia, or to saying that under existing circumstances Australia is let off too easily. I am not able to concur in this view; I am afraid that the inference would certainly be drawn that, in my opinion, Appendix F. is the true method of calculation. It seems to me impossible to accept any basis of a general nature without the opportunity being given to every interest affected to appear