The Sun.
London, England, 1860-09-03 00:00:00

PACKET CONTRACTS.

The Committee on Government Contracts with
the Steam-packet Companies for the conveyance of
mails by sea have made their first report, leaving
telegraphic contracts for a second, which is to fol-
low. The following is a full summary of the con-
tents of this report :—The Committee state that the
existing system is this :—lt is by the Admiralty
that these contracts are actually entered into,
but the power of authorising them and prescribing
their terms is in the Treasury, who commu-
nicate with the Post-office and Colonial-office on
the questions involved. Unhappily,, there is no
proper concert between these parties. In the case
of the first Dover contract, in 1854, the Admiralty
required the contractors to provide more boats than
were really needed, the object being to get them
to purchase Admiralty steamers then employed on
the same service, but known by them to be unfit
and incapable of attaining the stipulated speed ;
the contractors accompanied their tench'. (but in
vain) with an offer to the Admiralty at £3,500 a
year less if they might employ only the requisite
number of boats and build their own, instead of
purchasing those of the Admiralty, but "it does
not appear that this letter was laid before the
Treasury !" This contract was extended in 1855
by the Admiralty without the sanction of the
Treasury, which was essential as the only legiti-
mate authority for such an act ; but when the Com-
mittee came to investigate the grounds of the re-
newal " the minute and other important papers
were missing !" The contract was again extended
in 1859, when the Treasury assumed that the state-
ments in the contractor's application to the Admi-
ralty had been inquired into there, while at the
Admiralty some material facts were not considered
to be within their province. In 1857 the West In-
dia contract was extended by the Treasury without
consulting either the Admiralty or the Post-office,
and the contract with the European and Australian
Company, which broke down, so that there was
great risk of au interruption of the postal commu-
nication, was arranged entirely by the then Finan-
cial Secretary, without confirmation of his acts by
any other authority. We now come to the com-
munication with America. In 1857 the Cunard
Company applied for a renewal until 1867 of their
contract for the conveyance of the mails (for £173,340
a year) from Liverpool to the United States, though
the old contract would not expire until 1862. Now
in 1857 circumstances had greatly altered since the
original contract was made ; there were six or seven
lines of steamers plying to North America; and a
Treasury Committee on Packet Contracts, presided
over by Lord Canning, had reported in 1853 that
where there is effective competition, and commercial
steamers are available, it is unnecessary for Govern-
ment to subsidise, since it may fairly expect to get the
service done hypaying the freight of the mailbags with
compensation for prescribed punctuality and for any
necessary increase of speed ; and further, that a
company which has had a liberal subsidy for its first
10 or 12 years (the Cunard Company has been sub-
sidised from 1840) may be fairly expected to con-
tinue the service on short contracts for three or even

for one year. Further, at this date (1857) the
Canadian Government had pointed out the injury
done to Canada by this large bounty to a line run-
ning to United States ports, and in reference to a
proposal from the Home Government that Canada
should pay a portion of the Cunard subsidy, the
Canadian Government asked that no renewal of the
contract be made without hearing what Canada had
to say ; and tlie Treasury, so recently as the 26th of
November, 1856, adopted a minute that the Governor
of Canada be informed that the existing arrangement
would continue until the expiration of Mr. Cunard's
contract, when the Treasury hoped an arrangement
might be effected more in conformity with an
equitable consideration for the finances of this
country. This was held in Canada to constitute
a pledge that the system would not be continued
without their being heard; and they proceeded
with extensive improvements in internal communi-
cation, and entered into a contract with the Mon-
treal and Ocean Steampacket Company for a line of
mail steamers to England at £e15,000 a year. Now,
the Admiralty recommending a compliance with
the Cunard Company's application, but the Post-
master-General strongly deprecating it (especially
so long before the old contract would expire) as in
♦iolation of the principles laid down by Lord Can-
ning's Committee, the Treasury on March 2, 1858,
wrote to the company That the contract was too far
from its termination to justify a renewal, but when
it advanced nearer a termination they would con-
sider favourably any application he might make.
Nevertheless, on the 29th of the same munth Mr.
Cunard renewed his application, and the Treasury,
without again referring to the Post-office, granted
it on the 20th of May, and requested the Postmaster-
General to suggest any modifications it might be ad-
visable to introduce in the new contract. In reply
he pointed out that the mileage rate was conside-
rably higher than that of any other packet ser-
vice, and added that the Liverpool, New York, and
Philadelphia Steamship Company, whose vessels
made their voyages at a speed not much inferior to
Mr. Cunard's—though subject to no penalties for
delay—had offered to carry the mails for the
amount of sea postage; and it may be mentioned
here that that company is now carrying the United
States mails to this country on those terms. Ex-
traordinary as it may seem, when the decision of
the Treasury granting this renewal was come to,
the Financial Secretary who entered office with
Lord Derby's Government. in March, was. not
aware of the correspondence of Canada, nor does it
(though on the Treasury records) appear to have
been known to any of the officers of the department.
The Committee say they have not received any
satisfactory explanation of this circumstance.
When the renewal of the contract became known,
the Canadian Legislature voted an address strongly
expostulating against a course of proceeding so in-
jurious to the interests of Canada, and praying
that the Canadian steamers might receive such
subsidy as would place them on an equal foot-
ing with others. But before this address arrived
another contract had been sanctioned ; for in
1858 Mr. Lever established a line of steamers from
Galway to the United States, obtained a contract
from the Government of Newfoundland for running
to that island, and established a company, who ap-
plied to our Government for encouragement in a
system of more frequent voyages. It was intended
to organise a service under which telegrams sent
through Newfoundland might reach Washington
in six days from London. The Liverpool Company
already mentioned wrote to the Treasury, remon-
strating against any mail grant to the Lever Com-
pany, and urging that it ought to be put up to
public competition, to which the Treasury answered,
on Nov. 9, 1858, that it was the practice of the
Treasury on establishing a new postal service to in-
vite tenders by advertisement and afford to all the
opportunity of competing. Nevertheless, the con-
tract was afterwards made without allowing com-
petition, and without any communication to the
Liverpool Company. The Montreal Company, the
company subsidised by the Canadian Government,
also remonstrated against a grant being made so
injurious to them without their being heard.
The Postmaster-General also reported against it.
But the Treasury, on the 22d of February, 1852,
made the contract, granting a subsidy of £78,000
a year, only introducing a new stipulation—that
the subsidy must be voted by Parliament. The
Treasury minute was not adopted according to the
ordinary routine, but Lord Derby states that he
was influenced by considerations of commercial and
social advantage in:relation chiefly to Ireland, and
did not invite competition because he considered a
preference due to the enterprise of the Lever Com-
pany iii first establishing a line of steamers from
Galway. and he was advised at the Treasury that
the subsidy was a moderate one. But there were
not before Lord Derby the communications with
Canada, nor with the Liverpool Company, con-
taining an implied pledge that competition should
be allowed. The committee observe that it would
have been easy to make an arrangement which
would satisfy the just claims of Canada, for the
Lever Company offered to make the port of arrival
Portland, which is the terminus of the Canadian
Grand Truck Railway, and the Montreal Com-
pany made fhe same offer if the Lever Company
would transfer the contract to them for a bonus Of
X 25,000 a year. The result is that England and
Canada are subsidising rival lines. The committee
wee not prepared to recommend Parliament to re-
fuse to vote the money ; but they consider that
such defects of administration must be remedied.
An act has just passed, transferring to the Post-
office the enforcement of packet contruto ; but they ''