The Cunard and Inman grants were sharply criticised, and a Parliamentary committee was appointed to investigate them. The committee's report sustained the critics. It observed that "the payments to be made when compared with those made by the American Post Office for the homeward mails are widely different, inasmuch as the American Post Office has hitherto paid only for actual services rendered at about half the rate of the British Post Office when paying by the quantity of letters carried." The committee recommended that these contracts be disapproved, and that the system of fixed subsidies be abolished. "Under all circumstances," they concluded, "we are of the opinion that, considering the already large and continually increasing means of communication with the United States, there is no longer any necessity for fixed subsidies for a term of years in the case of this service."[[AS]] This recommendation, however, was not accepted, and the contracts were duly ratified.
The report of this Parliamentary committee is significant in the evidence it indirectly affords, confirming the declaration of 1853,[[AT]]—that the postal subsidies were not as assumed, payments solely for services rendered, but in fact were concealed bounties.
In 1871-72, when a renewed effort was made to establish an American line of American-built ships,[[AU]] the British subsidies were again increased. Then, also, was instituted by the Admiralty the naval subvention system—the payment of annual retainers to certain classes of merchant steamers, the largest and swiftest, in readiness for quick conversion into auxiliary naval ships in case of war, and to preclude their becoming available for the service of any power inimical to British interests.
At the expiration of the Cunard and Inman seven years' contracts the postmaster-general applied the principle of payment according to weight throughout for the carriage of the North American mails. But preference was given to British ships, these receiving higher rates per pound than the foreign. In 1887 an arrangement was entered into by which the Cunard and Oceanic lines were to carry all mails except specially directed letters, and the pay was reduced.[[AV]] This method of payment continued till 1903.
Then another sharp change was made in the subsidy system to meet another, and most threatening American move. In 1902 was formed by certain American steamship men, through the assistance of J. Pierpont Morgan, the "International Mercantile Marine Company," in popular parlance, the "Morgan Steamship Merger," a "combine" of a large proportion of the transatlantic steam lines.[[AW]] Upon this, in response to a popular clamor, subsidy, and in a large dose, was openly granted to sustain British supremacy in overseas steam-shipping. To keep the Cunard Line out of the American merger, and hold it absolutely under British control and British capitalization, and, furthermore, to aid the company immediately to build ships capable of equalling if not surpassing the highest type of ocean liners that had to that time been produced (the highest type then being German-built steamers operating under the German flag), the Cunard Company were resubsidized with a special fixed subsidy of three-quarters of a million dollars a year, instead of the Admiralty subvention of about seventy-five thousand dollars, and in addition to their regular mail pay, the subsidy to run for a period of twenty years after the completion of the second of two high-grade, high-speed ocean "greyhounds" called for for the Atlantic trade. The Government were to lend the money for the construction of the two new ships at the rate of 2-3/4 per cent per annum, the company to repay the loan by annual payments extending over twenty years. The company on their part pledged themselves, until the expiry of the agreement, to remain a purely British undertaking, the management, the stock of the corporation, and their ships, to be in the hands of or held by British subjects only. They were to hold the whole of their fleet, including the two new vessels, and all others to be built, at the disposal of the Government, the latter being at liberty to charter or purchase any or all at agreed rates. They were not to raise freights unduly nor to give any preferential rates to foreigners.[[AX]] The subsidy is equivalent to about twenty thousand dollars for an outward voyage of three thousand miles.
Of the British colonies, Canada grants mail and steamship subsidies, and fisheries bounties. In 1909-10 the Dominion's expenditures in mail and steamship subsidies amounted to a total equivalent to $1,736,372. The amount appropriated for 1910-11 increased to $2,054,200; while the estimates for 1911-12 reached a total of $2,006,206. In these estimates the larger items were: for service between Canada and Great Britain; Australia by the Pacific; Canadian Atlantic ports and Australia and New Zealand; South Africa; Mexico by the Atlantic, and by the Pacific; West Indies and South America; China and Japan; Canada and France.[[AY]] The home Government pays the same amount as Canada toward maintaining the China and Japan, and British West Indies services.[[AZ]] The fisheries bounties amounted to one hundred and sixty thousand dollars in 1909.[[BA]]
The grand total of subsidies and subventions paid by Great Britain and all her colonies in 1911 approximate ten million dollars annually. The subsidies and mail pay of the Imperial Government amounted, in round numbers, to four million dollars, of which, in 1910, the Cunard Company received seven hundred and twenty-nine thousand dollars.[[BB]] Besides the Admiralty subventions, retainer bounties are paid to merchant seamen and fishermen of the Royal Naval Reserve.
Since the establishment of steam in regular ocean navigation, and the substitution of iron for wooden ships, England has maintained her leadership among the maritime nations. The total tonnage of the United Kingdom and her colonies, steam and sailing ships, in 1910-11, stood at 19,012,294 tons.[[BC]] nearly four fold that of any other nation.