"In undertaking this duty, the Government will in the first place have regard to the national interests, whether political, social, or commercial, involved in the establishment and maintenance of each particular line. Care must, however, be taken, in cases where the communication is desired chiefly for commercial purposes, to guard against an undue expenditure of public money for the benefit of private merchants. The extension of commerce is undoubtedly a national advantage, and it is quite reasonable that Parliamentary grants should occasionally be employed for the sake of affording fresh openings for it, by establishing new lines of communication, or introducing new methods of conveyance, the expense of which, after the first outlay has been incurred, may be expected to be borne by the parties availing themselves of the facilities offered them. But this having once been done, and sufficient time having been allowed for the experiment, the further continuance of the service, unless required for political reasons of adequate importance, should be made to depend upon the extent to which the parties chiefly interested avail themselves of it, and upon its tendency to become self-supporting."
Noticing the greater or less sums at which private companies may be induced to undertake short line postal service, and stating that the line is both benefited and injured by the necessity of punctual sailing hours, the Report states the reason why subsidies are required, thus:
"The vessels now under contract with the Government are, however, for the most part, required to maintain high rates of speed. The contractors are also subject to a variety of conditions, designed partly to secure the efficiency of the postal service, and partly to render their vessels available for other national purposes wholly unconnected with that service. In return, they are in the receipt of subsidies largely in excess of the amount of revenue derived from the mails they carry, and those subsidies are guaranteed to them for terms of years varying from four to twelve, most of which have at the present time not less than seven or eight years to run. An Estimate printed in the Appendix, will show that while the amount of the subsidies to foreign and colonial lines, as contracted for in the past year, was no less than £822,390, the sums received for postage upon these lines can not be estimated at more than £443,782."
The Report further says, as to the mode by which postal communication can be procured, "where frequent and rapid communication already exists, it is only necessary for the Government to secure from time to time the services of vessels already engaged in private traffic." But as there are no such cases in the transmarine routes, and as private enterprise supplies the demand of steam lines only on the short routes, like the inter-island service of Great Britain, or that to the Continent, or the service of the Sound, the North River, short coast routes, etc., in the United States, the Report goes on to say:
"There still remain, however, some cases in which there exists no private communication sufficient to render such a mode of proceeding practicable. Where this is so, and where a communication has to be created, it will be necessary that contracts of longer duration should be made, for it is unreasonable to expect that any person or association of persons should incur the expense and risk of building vessels, forming costly establishments, and opening a new line of communication at a heavy outlay of capital, without some security that they will be allowed to continue the service long enough to reap some benefit from their undertaking. It must be borne in mind, that the expensive vessels built for the conveyance of the mails at a high rate of speed are not in demand for the purposes of ordinary traffic, and can not therefore be withdrawn and applied to another service at short notice. It is, then, fair, that on the first opening of a new line, contracts should be made for such a length of time as may encourage the building of ships for the purpose, by affording a prospect of their employment for a considerable number of years. But we see no sufficient reason for continually renewing such contracts for periods equally long, after the object has once been attained."
(For the views of the Committee on the adaptation of the mail packets to naval service, see [pages 146] and [147].)
The Committee in summing up, presents the result of the investigation and the fruits of the service in the following impressive light:
"The value of the services thus rendered to the State can not, we think, be measured by a mere reference to the amount of the postal revenue, or even by the commercial advantages accruing from it. It is undoubtedly startling, at first sight, to perceive that the immediate pecuniary result of the Packet System is a loss to the Revenue of about £325,000 a year; but, although this circumstance shows the necessity for a careful revision of the service, and although we believe that much may be done to make that service self-supporting, we do not consider that the money thus expended is to be regarded, even from a fiscal point of view, as a national loss."
It has never been a favorite idea with British statesmen that the packet service should be self-sustaining; nor have they had any evidence to believe that steam companies could live on the postal receipts. It is evident from the following that the packet system is sustained without any reference whatever to the postal income, and for commercial, political, and social purposes alone; only using the income so far as it goes as a part of the contributions by the people to the general treasury. It says:
"Your Lordships have seen from our Report that in framing these contracts various objects have entered into the consideration of the Government, the cost of which ought not in our opinion to be charged upon the revenues of the General Post Office. A simple comparison of the receipts and expenditure upon some of the lines is in itself sufficient to prove this. If the Post Office is to be considered as a department producing revenue, it is not to be supposed that a line of vessels which costs the State £240,000 a year, and brings in no more than £56,002, (as is the case with the West-Indian packets,) or one for which £25,000 is annually paid, and which returns little more than one fifth of that sum, (as the Pacific line,) can be maintained as a part of its machinery; and, in fact, the contracts for many of the services have been made without reference to any estimate or opinion on the part of the Post Master General of their probable value as postal lines."