The then Court of Directors of the East India Company being opposed to the relinquishment of the postal service between Bombay and Suez into the hands of private enterprise this proposal was not entertained; and, the matter having engaged the attention of her Majesty’s Government, it was ultimately arranged that the East India Company should be allowed to retain the Packet Service between Bombay and Suez, and that the Peninsular and Oriental Company should submit proposals for the establishment (under Contract with the Admiralty) of a Monthly Mail Service between Suez, viâ Ceylon, and Madras and Calcutta, with vessels of 500 horse-power; and, in connection therewith, a monthly communication between Ceylon, Penang, Singapore, and Hong Kong, with vessels of 400 horse-power, thus effecting a Mail communication twice a month with India, and a Monthly Steam Packet communication with China.
After a lengthened negotiation a Contract was effected, in virtue of which the Peninsular and Oriental Company were to receive £115,000 per annum, equal to about 20s. per mile, for the Suez, Ceylon, Madras, and Calcutta Service; and £45,000 per annum, equal to about 12s. per mile, for the Ceylon, Penang, Singapore, and China Service.
This Contract was not put up to public competition, and there are obvious reasons to show why to have done so would have been useless, and unjust. It would have been useless, because it was well known that there were then no vessels in existence capable of performing such an extensive service, on the plan proposed, except the vessels which had, in fulfilment of the conditions of their Charter of Incorporation, been provided by this Company expressly for the East India Steam Communication; and it would have been unjust to the Peninsular and Oriental Company, after they had been induced to embark so large an amount of capital in providing ships of a description adapted to important national objects, not to have given them the opportunity of executing the Service on reasonable terms.
That the terms concluded upon were as reasonable and advantageous to the public interests as could have been at that time obtained, is sufficiently confirmed by the Report of the Parliamentary Committee.
A few facts may, however, serve to further elucidate this point.
In giving in their proposals for these Services, the Managing Directors submitted therewith detailed estimates of the expenses and receipts, to enable the Government to see and examine the grounds upon which the sums required for the Mail Service were based. And it appears, by the evidence taken before the Committee of the House of Commons, as well as before another Committee of the House of Lords, on the Post-office Service, (Session 1847,) that this part of the question was subjected to a very close and rigid scrutiny at the Admiralty. Also, that an estimate was made to ascertain what the proposed Services could be done for by public vessels; the result of which was, that it would have cost by such means not less than 42s. 6d. per mile, (less such returns as might be obtained from the conveyance of passengers.)
Looking therefore, to this estimate, and the fact that the Bombay and Suez Service, with vessels of only about 200 horse-power, was actually costing, under the management of the East India Company, after deducting the receipts for passage-money, at the rate of 31s. 6d. per mile, namely, £110,000 for 70,000 miles, the rates received by the Peninsular and Oriental Company—being about 20s. per mile for the Suez and Calcutta Service, and 12s. per mile for the Ceylon and China Service, or if averaged for the two Services together, about 17s. 1d. per mile—it cannot be considered as exorbitant by any reasonable or unbiassed mind; but it will rather be admitted that the Company in this, as in the previous instances, are entitled to take credit for effecting a great public improvement, at a less cost than what it could otherwise have been obtained for.
The following evidence on this subject was given by Mr. Croker, of the Admiralty.
1388. Does there appear to have been any estimate made by the Admiralty of the expense of doing that service?—Yes.