IMAGE EVALUATION TEST TARGET (MT-3) 1.0 1.1 |^|2JB K|25 ■^ Kii 12.2 £ »£ 12.0 L25 ILU .6 III >^ '/ ^f^ Photographic Scfences Corporation 4V ^^ 23 WIST MAIN STRUT VtfUSTill.N.Y. MSSO (716)872-4503 '^ CIHM/ICMH Microfiche Series. CIHIVI/ICIVIH Collection de microfiches. Canadian Institute for Historical Microreproductions / Institut Canadian de microreproductions historiques 1 k ^ Technical and Bibliographic Notas/Notes techniques et bibliographiques Til to The Institute has attempted to obtain the best original copy available for filming. Features of this copy which may be bibliographically unique, which may alter any of the images in the reproduction, or which may significantly change the usual method of filming, are checked below. D D D n Coloured covers/ Couverture de coulaur I I Covers damaged/ Couverture endommagie □ Covers restored and/or laminated/ Couverture restaurie et/ou pellicuMe □ Cover title missing/ Le titre de couverture manque I I Coloured maps/ □ Cartes g6ographiques en couleur □ Coloured ink (i.e. other than blue or black)/ Encre de couleur (i.e. autre que bleue ou noire) I I Coloured plates and/or illustrations/ Planches et/ou illustrations en couleur Bound with other material/ Reli6 avec d'autres documents Tight binding may cause shadows or distortion along interior margin/ La re liure serrie peut causer de I'ombre ou de la distortion le long de la marge intirieure Blank leaves added during restoration may appear within the text. Whenever possible, these have been omitted from filming/ II se peut que certaines pages blanches ajoutdes lors d'une restauration apparaissent dans le texte, mais, lorsque cela 6tait possible, ces pages n'ont pas iti filmies. L'Institut a microfilm^ le meilleur exemplaire qu'il lui a 6tt possible da se procurer. Les details de cat exemplaire qui sont peut-dtre uniques du point de vue bibliographique, qui peuvent modifier une image reproduite, ou qui peuvent exiger une modification dans la mAthode normale de filmage sont indiquAs ci-dessous. I I Coloured pages/ Pages de couleur Pages damaged/ Pages endom magmas Pages restored and/oi Pages restaurdos et/ou peilicuides Pages discoloured, stained or foxet Pages d^colordes, tachetdes ou piqudes I I Pages damaged/ j I Pages restored and/or laminated/ r~~| Pages discoloured, stained or foxed/ □ Pages detached/ Pages ddtachdes □ Showthrough/ Transparence □ Quality of print varies/ Qualitd indgale de I'impression I I Includes supplementary material/ Comprend du materiel suppldmentaire Only edition available/ Seule Edition disponibie D Pages wholly or partially obscured by errata slips, tissues, Qtc, have been refiimed to ensure the best possible image/ Las pages totalement ou partiellement obscurcies par un feuillet d'errata, une peiure, etc., ont M filmdes A nouveau de facon d obtenir la meilleure image possible. Tf pc of fil Oi be th 8i( ot fir 8i< or Th sh Til wl Ml dil en be rig re( m( Additional comments:/ Commentaires supplimentaires: Docket title page is bound in as last page in book but filmed as first page on f iche. This item is filmed at the reduction ratio checked below/ Ce document est filmi au taux de reduction indiquA ci-dessous. 10X 14X 18X 22X 28X 30X • 12X 16X 20X 24X 28X 32X The copy filmed here has been reproduced thanks to the generosity of: Library of the Public Archives of Canada L'exempiaire filmA f ut reproduit grflce A la gAnirositi de: La bibllothique des Archives pubiiques du Canada The images appeering here are the best quality possible considering the condition end legibility of the original copy and in keeping with the filming contract specifications. Origlnel copies in pr'nted paper covers are filmed beginning with the front cover and ending on the last page with a printed or illustrated impres- sion, or the back cover when appropriate. All other original copies are filmed beginning on the first page with a («rinted or illustrated impres- sion, and ending on the last page with a printed or illustrated impression. The last recorded frame on each microfiche shall contain the symbol -^^ (meening "CON<- TINUED"), or the symbo! y (meaning "END"}, whichever epplles. Les images suivantes ont At* reprodultes svec le plus grand soln, compte tenu de la condition et de le netteti de l'exempiaire f UmA, et en conformity avec les conditions du contrat de filmage. Les exempleires criginaux dont la couverture en papier est ImprimAe sent fllmte en commenpant par le premier plat et en terminant soit par la dernidre page qui comporte une empreinte d'Impression ou d'illustration, soit par le second plat, salon le ces. Tous las sutres exempleires originaux sent fllm6s en commenpant par ia premiere page qui comporte une empreinte d'impressioK ou d'illustration et en terminant par la dernlAre page qui comporte une telle empreinte. Un des symboies suivants apparaftra sur la derniAre image de cheque microfiche, salon le cas: le symbols »»> signifie "A SUIVRE", le symbols ▼ signlfie "FIN". Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included In one exposure are filmed beqinning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent Atre filmfe d des taux de reduction diffArents. Lorsque ie docu:Tient est trop grai^d pour Atre reproduit en un seul clichA, 11 est film* d partir de I'angle supArieur gauche, de gauche d droite, et de haut en bas, en prenant le nombre d'images nAcessaire. Les diagrammes suivants lilustrent ia mAthodo. 1 2 3 :x 1 2 3 4 9 6 B j j^ SawSSB BSM^ffi^ ^^^ ^h s***--. 1*. 4 :# Vrit ia particularly requested that ttt Papers distributed to the Members of tUs Committee may be considered strietfy confidential. DRAFT REPORT TO BE PEOPOSED BY CHAIRMAN. 14 May IQdu. ■■% 'M^\,- [N. B. — The Member receiving this Paper it particularity requested to bring it with him when he attends the Committee, as it has been found twcessanj to limit the issue of Copies.] Select Committee on Pack^juid Telegn^fi^ Cmtrmat. 18^. \ I v.j,b-{a).* .- »ii>»M,rf'»li*i. tte Papers • Committee Hat. ^'- 1960. T tMAN. »«%- y Paper is him when been found 1 S^f^it*^-* ^T >: ^; Members of *yy/'^ Committee may be considered «/r/c% ccj/?• 4773- *• by them to be incapable of attaining the speed which they stipulated for. The formal tender was aceompAoied by a separate letter from the parties, offering ta rm>. 1859^ Am. perform the service for a considerably lower subsidy than that stipulated kt in p. 441. the formal tender, if they should be allowed to employ only five boats, and for a still low^r sum if, instead of purchasing any of the Admiralty boatn, they should j\Oi46— («)•• A ' themsiBhres ( 2 ) (Rep. 1859.) 4366. 4636. Rep. 1859, Q. 337«-8o. 3463-7. Q. *%ag et uq., 3146 «t uq„ aggo et $eq. >- >^"- themselves build new boaU. It docs not appear that this letter was laid before the Treasury ; and next year, tlie Admiralty took upon themselves, without the ^anction of the Treasury, wliicli was essoutiul as the only legitimate authority for such an act, to enter iuto a new contract, extending the period of endurance from four to eight years. The practical result of this course of proceeding was, that the Government became bound to pay a yearly subsidy of 15,600/. tu contractors, who in a sepa- rate letter, accompanying the original formal tender, had ofl'ered, for 12,000/. a irear, to undertake the service, for the period ultimately given, with five efficient mats (amply sufficient for their purpose), to be provided by themselves, the Trea- sury not having been marie aware of that lower offer, and not having authorised any contract for that period. Your Committee, also, in endeavouring to investigate the grounds on which the Dover contract was renewed in 1865, found that important papers were missing, and that the minute was not forthcoming stating the grounds of the renewal. Again, in reference to the extension of that contract in 1869, the Treasury proceeded on the assumption that the statements set forth in the contractors' application, addressed to the Admiralty, as the grounds on which an extension was sought, must have been inquired into, and ascertained to be correct, by the Admiralty, before giving their recommendation in its favour ; while at the Admi- ralty |po-««el^-mql^rT was ma de , it ha v in g been thoro held that a n y i nv es tigat ion i H iii ii it li i ii ihn prnv i n r r n o t of tin A i l iii irr i l l ji l iii l (i f th r Tr r mn r y i Between these two dates, namely, in 1857, an extension of two years in j/^^^gard to the West India Contract was granted by the Treasury without consulting either the Admiralty. or the Post Office; and while, in 1858, in :e 7 Q. 1705 c/ M^., 1771,1 968 rt»«y., 1980. Q.40. reference to a contract enterecf into by the Colonial Government of Newfound land, subject to the approval of the Home Government, by whom part of the subsidy was to be contributed, the Treasury refused its sanction, in consideration of a Report of the Admiralty, to whom a reference had been made, of the insuffi- ciency of the vessels, they next year gave their sanction, limited, however, to one year, to a similar contract entered into by that Ooverunient, on the like condition, with another company, without requiring any report from the Admiralty. The case, likewise, of the contract with the European and Australian Company, formed in 1857, strongly illustrates the defects of the existing system. That contract involved a ye;trly subsidy of 186,000/. of which one-lialf was to be paid by the Australian colonies, who hail no opportunity of being consulted in the framing of the contract ; so that special circumspection was required. The oH'erers preferred were a new company without previous experience, and who had no ships fit for the work. One of these, the " Oneida " which was reported against by the |)rofessional officer of the Admiralty, and had not the horse power or the tonnage required by the contract, broke down on her first voyage. Time was not kept, and although the colonies complained, no steps had been taken to insure the fulfilment of the contract with suitable vessels. The com- |)any in one year lost their capital (400,000 /.) ; the service proved a complete failure, and great risk of an interruption of the postal communication was incurred. iKiSi Q. 326. J^^ This contract had been entirely arranged by the^Fiuu.icial JS.cretary, whoso Q- 375 "6. actsji^ uo h matters, a aaa n l ing . tu the uougu of t he clLpai ' tni e .H t j i L q uiim n t con- Q 446'--7 firmation by any other autiiority. Q. 4968. Yt is, however, in the cases of the renewal of the Cunard Contract in 1 858, and the granting of the Galway Contract in 1859, that the defects above referred to, and the eviljj incident to the system of not submitting such contracts to Parlia- mentary cGusideralion anterior to the time when the first money vote under them miiv be called for, have been most strikinuly exhibited; and on this account, as well as on account of the character and importance of the proceedings them- selves in regard to these contracts, Your Committee deen> it esbeutial to lay the facts before The House somewhat in detail. The first Contract with Meesrs. Cunard, Hums, & M'lvor for the conveyance of the mails between this country and the United States and North American Provinces was entered into in June 1840. At Q. 85. Q.83. Q. 8(14. Q. S6a. Q. 80. Q. 90. Q.87-9. Q.93. Q.5109, 10. / ( 3 ) At this time there was no line of steamers plying between Britain and Ame- rica ; the undertaiiiDg was considered to be attended with risk ; the period of endurance was fixed at seven years, iind the Cunard Company became the rontractors after an attempted cumpetitiun hud drawn out only one offer, much above the terms on which they undertook the service. The contract has since been repeatedly renewed and extended, with certain modifications, and the service has throughout been performed, wiih paddle-wheel gteamers, in the most thoroughly efficient aud admirable manner. The last renewal, prior to that of 1858, was in 1862, when a contract was entered into for a weekly service between Liverpool on this si.'o, and New York and Boston, alternately," on the other side, for a yearly subsidy of 17.3,340/. This contract was to continue in force till 1st January 1862 ; and thenctforward till 12 months' notice of determination should be given by either of the parties. In October 1857, there being more than four years of the then subsisting p^j t,,-^ contract still to run, Messrs. Cunard & Co. applied for its renewal, with an ex- No.i84)8eH.'3, tended period of five years after its expiry in 1862. This application was rested 1859, p. 4a. on the ground of the service having been so efficiently- performed, and of the im- portance of maintaining the British line against United States competition, in order to do which, it was, they pleaded, necessary that the company should be encouraged, by having an extended term, to build new vessels of a larger and still swifter de3cri|)tion. The state of matters had by this time greatly altered since the original contract was entered into in 1840. On the one hand, the United States Government had subsidized a line of f^teamers for the conveyance of their mails, known as the Collins' line, and. on the other hand, private companies had established lines for traffic in the conveyance of passengers and goods ; so that, in addition to these two sub- sidized lines, there were statedly plying between this country and North America, and with great regularity and speed, six other lines of steamers. Further, in 1853, the subject of Packet Contracts had been submitted by the Treasury to the consideration of a committee, presided over l)y Lord Canning, then Portinaster General, and of which Mr. Cowper, S.r Stafford Northcote, and Mr. Bromley, were the other members. That Committee had returned their well known Report, in which they recom- Pari. Paper, mended that the idea, previously entertained, of attempting to make mail packets N».i95,Ses».i«53. available as armed vessels in case of war, should be abandoned, and that stipu- lations with that view should no longer be inserted in the contracts, and laid down important principles as to the forming and renewing of such contracts. In particular, while recognisinj? the propriety of subsidies being gnuited on tiie establishment of a service where " the ordinary traffic would not be renin- P. «. " nerative for steamers," they stated their opinion, that wiien " provision has to " be made for the conveyance of mails, in cases where steamers employed for " passengers and commerce are available, and there is effective competition, it is " not necessary, as in the former case, for the Ciovernment to subsidize the con • " tractors, by contributing a considerable portion of their receipts, since it may " fairly expect to get the service done for a payment which will cover the fnigiit " of the mail bags, and compensate for the prescribed punctuality of departure " aud arrival, and for any increase of speed that may be agreed upon." And they observed, "The increased demand for steam comumnicatioi), and ihc ^4- " recent adoption of the screw propeller to trading vessels, render it probable " that in future renewal of contracts, or the establishment of new ones, the " Government may be able toobtain the services they recjuire for payments fixed " on the latter calculation rather than the former, and that it will not be neces- " sary to extend the duration if the contracts for so long a period as has hitherto " been generally considered necessary." In regard, again, to this matter of tiie period for which such contracts should be granted, this committee observed, that where no private coniinunication p- cxisied, adeciuate to admit of a sufficiently speedy service, the contracts should ht' 0.4G— («).* * of Pari. Paper, No. 330, p. 48. Q. aC^. ( 4 ) / Pari. Paper, No. il4i SeM. 3, 1859, pp. 13, 14. P. 7 of such duration as to afford security to tlic undertaken), " that they will be *' ullowed to continue the service Ion;j; enough to reap some benefit from their " undertukinfj;;" liolding it to be *' fair, tliat on the first opening of a new line " contracts slumld be umde for sucli a leiigtii of time as may encourage the " building of shins for the purpose, by affording a prospect of their employment " for a couBidcraole number of' years." " But " (the Report proceeds) " we see no sufficient reason for continually " renewing such contracts for periods equally long, after the object has once been " attained. A company which has received a liberal subsidy for 10 or 12 of the " first years of its existence, ought to provide, by the (istabhshment of a sinking " fund, for the nmiutcnance of its fleet of vessils, and may be fairly expected, " after having been compensated for the original hazard, to continue tho Mrvice " by fresh contracts entered into cither from year to year, or for a period not " exceeding three years." Another matter, also, had arisen in the year immediately preceding that of Messrs. Cunard & Co.'s application, which had an important bearing on the (juestion as to the decision which should be given upon it. A diflTerence as to the mode of charging postage had occurred between the Canadian and the Imperial Qovernmcnts. In the course of the correspond- ence which ensued, the views of the Canadian Government on the general question of the injury done, in their estimation, to the interrstp of Canada, by the Home Government giving a large bounty to a line running to United States ports, and so driving Canadian mails and traffic to the ports, and by the railways and canals of the United States, were strongly expressed ; and in a despatch from the Governor General of Canada to "the Secretary of State for the Colonies, of date 2d September 1866, after stating that they " cannot ask for any breach of faith towards the present contractors," he ob- served, " l)ut we may surely ask that no renewal of that arrangement should " be made without hearing what Canada hr.s to say when the opportunity occum. " We may hope that no course will be pursued adverse to the principles of free " trade, by the cootinuance of a large bounty io the Hoston and New York " lines." This correspondence having been laid before the Lords of the Treasury, Q. iGfia. they, on the 26th November 1856, adopted a Minute, in terms of which the •Secretary for the Colonies., in a despatch to the Governor General of Canada, of the 3d December, intimated, that " their Lordships have apprized me that the " existing arrangements with respect to tlie Canadian mail service will continue No. 184, p. 15. " until the expiration of Mr. Cunard's contract, when they hope an arrange- " ment may be efl'ected more in conformity with what they would regard us an " equitable consideration for the finances of this country." The assurance thus given, though in immediate reference to a specific postal question, was naturally, and, as Your Committee think, looking to the terms of the correspondence, justifiably, held in Canada to constitute n pledge, on the Q' 4577- P'lrt of the Home (lovernment, that the system of subsidizing- lines of packets Q- (''*59)5«6> running to United States ports would not, after tiiu expiry of the subsisting «' «?• Cunard contract, be continued, without at least giving the Government of Canada an opportunity of being heard. In the meantime, the Canadian Government proceeded with extensive im- provements in the means of internal coinniuuication through the territories of the colony, in which a very heavy public debt has been incurred, and they entered into a contract with the Montreal and Ocean Steam Packet Company for the conveyance of their mails with this country to and from Quebec in summer, and Portland in winter, at which latter port the Canadian Grand Trunk Railway (passing, for a comparatively short distance at its eastern extremity, through the territory of the United States) has its terminus. For this service a subsidy of 45,000 A, provided exclusively by the Canadian Parliament, wa3 agreeiu so tiitirely lost sight of; hut it seems, in part at least, to have arisen from Q. 1141. 1K40. the practice, which appears uniformly to have till recently prevailed at thq i86o-i». Treasury, of these postal contract questions being exclusively kepi under the personal consideration and disposal of the Secretary for the time being. It is right also to add, that no allusion is made *o that correspondence, or to the question of which it treats in minute of 2d March, above fjuoted, left by the Secretary who had just vacated office. When the fact of the renewal of the Cunard contract, without any previous 0*4374 ('My* notice to the Goveniment of Canada, became known, it excited great surprise and dissatisfaction. Certain members of that Government being in thi^ country at the time when ii first transpired, a remonstrance was, on their behalf, addressed N*. 184, p. s6. to the Home Government, in the form of a letter from one of their number, Mr. Gait, ' ispector General of Canada, to the Secretary of State for the Colonies ; and subsequently the Legislature voted an Address to Her Majesty, strongly expostulating against a course of proceeding so injurious, in their Ii, p. 30-1. opinion, to the interests of Canada, and praying " that no renewal of the Cunard " contract be made, that no subsidy be granted to any other transatlantic line, '* until Canada shall have had on opportunity of urging such arrangements as " will conduce to its prosperity ;" and that such assistance, by way of subsidy, may be given to the Canadian steamers, " as will place them on an equal footing " with other lines of steamers plying between British and Colonial ports." This Address of the Canadian Legislature, however, did not reach Britain till after the Home Government had sanctioned the formation of the Galway con^ tract, to the proceedings in reference to which Your Committee now call the attention of the House. In 1858, ■: private company, then newly formetl, and chiefly promoted by Mr. Lever, by wJiosc name it has since been generally known, established a line of steamers for commercial purposes, to ply monthly between the ports of Galway, in Ireland, and New York, in the United States. Tlieir first vessel sailed on the 19th of June of that year, and was entrusted by the Postmaster General with the carriage of a mail bag, as is frequently done in the case of private i.hips starting at times convenient for the Post Office. About that time, a contract made by the Government of Newfoundland, subject to the approval of the Hotne Government, for a postal service between that colony and Great Britain, on the one hand, and the United States on the other, had fallen through, from that approval being withheld in consequence of No. 230, 1859, a Report by the Admiralty as to the insufficiency ot the vessels proposed to be PI). 16-17. employed. On this a negotiation wus opened by Mr. Lever's Company with the Ne'.vfoundland ( 7 ) he e) of to Newfoundland Government, unci iir the sanction of the Home Government, for P, to-i, a contract for the numc service, tmt niuliiug Qalwny the port on this nide the Atlantic, instead ot LivrTpool, !ht years, and had more than once offered to carry Her Majesty's mail free, for ocean postage, and concluding thus : " If anj' mail grant is to be given between Galway and any other port, T beg to submit it ought to bo put up to public competition." In a second letter, of date 26th October, addressed to the Lords of the /j. Treasury, the company set forth more fully their claims, and the capacity of the vesseh then possessed by them; and their trust, " that your Lordships will " take their case into consideration, and will see that, in any extension of postal " service, this company have a prior claim to any other steam coiupany, and " they trust they will be allowed to tender accordingly." In reply to these communications, the following letter, dated 0th November, n». §30, p. 46. was addressed by Sir Charles Trevelyan to Mr. Inman : •' I am desired by the " Lords Commissioners of Her Majesty's Treasury to inform you, in reply to the " letter addressed by you to this Board, on behalf of the Liverpool, New York " and Philadelphia Steam Ship Company, that when a new postal service is " about to be established by the Government, it is the practice of their Lord- " ships to invite tenders by public advertisements, thereby affording to all " parties the opportunity of competing for such services, provided they conform " to the required conditions." No further communication was -nade to this company before the contract Pari. Paper, No. with that of Mr. Lever was concluded. *30f p- 47- A collateral matter requires here to be adverted to. In the course of this same no, 357, 1859, autumn, a memorial was addressed to the Lords of the Treasury by the Chamber pp. 89-gi. of Commerce of Limerick, praying that a Commission of Inquiry, then understood by them to be visiting Galway, " on the subject of its suitability as a harbour of " refuge and pucket port, may be directed also to visit the Shannon, and report '* thereon." Professional reports, somewhat conflicting in their conclusions, had at former periods been made to the Admiralty, as to the comparative merits of Galway and certain ports in the Shannon : and, on the application of the Lord Lieutenant of Ireland, the Admiralty had, in September 1858, directed two officers, who 04(1 — («).* were ( « ) Pari. Paper, No. 184, p. aO. Q. H56-58. Q. «965. were members of a Commission tlion inspecting harbours in Ireland with App. , No. re*" rorico to tiio question of harbours of refuge, to visit Galway, and report, Tirst, how far it was capable of being niacle a liarbour of refuge ; and, secondly, whetlier its advantages " would invest it wit'' claims as a packet station. It was the visit of tiiese officers to Galway, consequent on this instruction by the Admiralty, that had given occasion to the memorial of the Limerick Chamber of Commerce. That memorial was transmitted by the Treasury to th'ork, via St. John's, Newfoiindland, for :i,000l. a voyage, the voyages to be fortnightly or weekly, as tlie Government may require, and the contract to be for seven years; the contractors! being bound to deliver at St. John's telegraphic messages from the United Kingdom to British North America and the United States in six days, casualties excepted. This offer was referred Ly the Treasury to the Postmaster General, by a P- 5«' minute of date 23d January, requesting " hi.? Lordship's opinion as early as " possible." On the 12th of July, Lord Colchester returned a report, expressing his opinion, P. 68-3. in accordance with the principles set forth in the letter of his predetiessu'* (on the Ciinard contract renewal), in whin, irre- " spective of Governnunt support, affords unusual racilities, Governineut should " not I ( » ) •* not fetter itself by further engacemcnts, unless of tlie self-regulating and elastic " kind I liavo described ; but ahould, as far as possible, lie free to avail itself *' of every improvement which may take place in the means of swift and punctual " transit. ' No reference was made to tUe Admiralty for a report as to risk and delay to be apprehended from touching at St. John'*, referred to by the Postmaster General, or any other nautical question involved, nor for their opinion in regard to the fitness ot Galway as a packet station ; and ou the 23d February a Treasury Minute was passed, authorising a contract to be entered into witli tlie Lever Company " for the conveyance of the mails, once in every fortnight, to and from " Galway and New York, and Galway and Boston, alternately, at a rate not " exceedmg 3,000/. for each voyage out and home; subject, first, to the pecuniary " means of the company being established to the satisfaction of their Lordships ; " and, secondly to such arrangements as to time and as to the build and con- " struction of the vessels to be employed ; and also to such conditions and penalties ♦' for ensuring the punctual and efficient performance of the service, as are " usually in similar contracts, or may be thought necessary by Her Majesty's " Governmejit." The details of the contract were subsequently arranged at the Treasury, the time stipulated for Hie voyages being fixed on the basis of an average of the Cunard line service, but deducting the time spent in transmitting themai's I'rom London to Liverpool, and placing them ou board the steamers, aud uc additional 24 hours. The contractors were to build four new vessels, and to commence tlie servioR in June I860. Tiie contract did Jiot include the service under the Newfoundland coif tract. The Treasury accepted a certificate by the chairman and secretary of the corapiny as sufficient j)roof of its jjocuniaiv means ; but that certificate does not appear to Your Committee so satisfactory as it was deemed by the Treasury. The company immediately thereafter contracted for the building of their new vessels, paddle-wheels, and of great power, at a cost of 100,000 /. each. One of these has recently been launched, and the company expect to be ready to com- mence the service in June. In the meanwhile, arrangements have been made by the Canard Company, under which their vessels, sailing from Liverpool, touch al, (^oeenstown, and there receive mails to tlie latest date, forwarded by railway. This service is not stipulated fur in iliiir contract, and no additional payment is niaile on account of it ; liut Sir Samuel Cunard, in his evidence before the Committee, stated that their present .nteinion was to continue it. The Treasury Minute of the 22d February, antliorisiii;?. the (ialway contract to be enteieil into, was not adopled accordini^- to the ordiiiary luutiiie in llie case of matters «43- ( 10 ) Q. 3545 0.2557-3581. Q. «.';48-so. ii546. t58«. Q. a55». 34G7. •1 fhe present line, thercl)y pro tanto increasing the cost of the Cunard contract. I am not aware tliat any complaint has been made by the general mercantile community of this country of a want of accommodation in this respect. Mr. Cunard's cofttract may be taken (the American portion of it) at about 178,000/. per annum ; add to this, 78,000/. per annum for a fortnightly communication vid Galway, and tho amount of your subsidy will be 256,000/. There is no doubt, I apprehend, that this will considerably exceed the amount of your postage. As a mere postal question, therefore, I should say there was no ground for incurring so large an expense. But it may lie well worth the cost on other grounds, on which I can scarcely venture an opinion. As compared with what the Govern- ment is paying for the West India service, the subsidy would not be an extra- vagant one ; and the service is certainly one of not less importance. But it it is far more than is being done f i' 'lie Australian colonies, who are called upon to contribute one-half of the whole expense of their mail service. The Eastern Australasian Colonies iiave recently been pressing us for an additional service vid Panama, which would cost about 150,000/. or 160,000/. per annum, the half of which, as the proportion which would fall upon tnis country, would amount to the same figure as that asked by the Atlantic Com- pany. And 1 think it would be difficult to refuse their claim if the present one be acceded to. The subsidy itself, 3,000/. a voyage, is a moderate one, if th«j conditions are fulfilled. Of course the company would be under penal- ties, as in the case of the Peninsular and Oriental Company for the Australian contract. I may observe that the principle of providing payment for mail services by giving up the sea postage to the parties carrying the mails, has been frequently urged by the Postmaster General, but has never been acquiesced in by the Treasury. I see, therefore, no particular force in this part of the Post Office objection. I make no observation upon the calculations of speed, because, although the whole subject hangs upon that, the Government can " obtain ample security by means of proper penalty clauses on this head." This Memorandum was returned, with a recommendation endorsed on it, signed by the First Lord, and countersifjned by the Chancellor of the Exchequer* which was in the terms of, and was tl^eieupon turned into, the Minute of 22 Fe- bruary, already quoted. ;r Your Committee deemed it proper to examine Lord Derby, who stated frankly and clearly the important considtrations of comiaercial aud social adi'antage, in relation chiefly to Ireland, which had led him to sanctiou this new service ; and explained that, in uiithorising the contract to be entered into with Mr. Lever's Company, without admitting of competition, he considered the preference (the amount of subsidy having been reported by Mr. Stephenson to be moderate) due to tlieir enterprise, in first establishing a line of steamers from the port of Galway. But it appears from his Lordship's evidence, that, when he pronounced his decision, he was not in possession of some materials very important for forming it, and had not bad in view some considerations wliicli, in ihu opinion of the Committee, should have been essential elements ;n the determination of the questiofi. There were not before him the papers containing the communications between the Home Government and that of Canada, in 1866 ; nor the correspondence between the Treasury and Mr. Inman, on behalf of the Liverpool and New York Company, in the immediately preceding Octolicr and November; nor the remonstrance, by Mr. Gait, of 11 November, to the Secretary of State for the Colonies. His Lord^llip's decision was thus given in ignorance of the strong feeling in Canada as to the injury done to their interests by the system of subsi- dizing what tiny deemed rival lines; of the assurance given in 1856, on which tlu! Canadian (ioverimient relied, as a pledge that they would have an oppor- tunity of lieing heard before that system was renewed or extended : and of the .surprise and (iissatisfiction already occasioned by the renewal, without hearing them, uf the Cunard Contract; and in ignorance also of the implied pledge pivcn to Mr. Inman, that the new service \u)tild be thrown open to competition. It was likewise given without any opinion having been sought from the Lords of the Admiralty, either on the nautical questions referred to by the Postmaster General in his letter of 12 February, or on the professional reports (which reports, however, were before Lo.d Derl>y}, as to the respective merits of Galway and the ports Mr. 00/. ivid ubt, As I ( 11 ) ports of the Shannon ; and without any consideration of the question whether, a»suminc; that the interests of Ireland warranted the establishment of a senrice from GaTway, that object might not have been secured by an arrangement which would, at the same time, have provided for the wants, and satisfied the just claims, of Canada. * That such an arrangement might have been made has been clearly proved to Your Committee. Indeed, in the tender of the Lever Company, they offered to the Government the alternative of making either Portland, Boston, or New York the packet port on the other side of the Atlantic, and the former of these ports being the terminus of the Canadian Grand Trunk Railway, its selec- tion would, for the winter mouths, have in a great measure served the purposes of Canada, though the Government, in accepting the offer, fixed on Boston and New York as the ports for alternate voyages, ahd left out Portland altogether. Further, however, tht, Montreal and Ocean Company have since given the most conclusive of all proofs that such an arrangement would have been attainable, by actually agreeing to undertake the service stipulated for in the Galway Contract, but makini! Portland the station on the American side, along with that under the contract which they at present hold from the Government of Canada. Shortly after the Committee of last Session rose, negotiations were entered into between Mr. Allan, manager in Canada of the Montreal Company, then in this country, and the directors of the Lever Company, resulting in an agreement on that of the Montreal Company, dependent on the consent of the Home Government (which was necessary, in consquence of a prohibitory clause in the contract) being obtained to a transfer of the Galway Contract ; but, subject to that consent, binding on the Montreal Company, who were to undertake its obligations, and to pay the Lever Company a bonus, calculated at the rate of 25,000/. a year, during the subsistence of the contract. The Government declined to interfere while the matter was before a Committee of the House of Commons, and the transaction fell to the ground ; but the Montreal Company were then and still are perfectly ready to carry the agreement into effect, if the sanction of the Government were i^iven, ani the Galway Company were willing now to concur in it. Your Committee regret the failure of those ncg(.*iation3, and thoy arc of opinion, that if matters remain on the footing on which they now stand, the results must be serious. Besides the oversight of the pledge to the Liverpool and New York Com- pany, tlie people of Canada will have boon disappointed in oxpectations they had been led to entertain in regard to a matter, deemed by them of vital inii>ortanco. llioy must for several years to come be subjected to injury, for which the Homo Government would not be ia a position to provide a remedy or conipensition. Still less could it place them on a footing with our other colonies. This country, in reference to all its intercolonial mail services, bears a pro- portion of the expense, in no case less than one-half, and generally far beyond that amount. While, however, she has forced on the Canadian Government, by her subsidies to other lines, the necessity of burdening their finances with a large subsidy to their own line (increased to 90,000/. since the Galway contract was agreed to), for a service which they believe could have been obtained, but for the subbidies given by the Home Government for the postage alone, she will have pn eluded herself during the Bubsistencc of these contracts from giving any relief to Canada, except at an expense which, in a financial point of view, and with reference to the interests of this country, would be altogether unwarranted. The whole revenue derived from the ocean postage of the correspondence between this country and North America is 112,000/. The cost of the sea conveyance is 101,000 /., being, (according to the calculation of the Post Office), an excess of expenditure of 70,000 /. Under the Galway Contract 78,000 /. will be payable, whi( h must all be added to the excess'; because, while the letters whicli will be carried by the new line will simply be transferred to it from the Cunard line, no deduction in the subsidy payable to the Cunard Conipany will cake place in consequence of the transference. The total excess, therefore, for 40— (e necessary to discuss the general question wliether, even where no corrtipt proceeding is estublished against contractors, the mere circumstance of their being free from such charge should exclude the exer- cise, by the House of Commons, of its constitutional power of refusing to vote the monii'S for carrying out the contracts of the Executive Govtrument, however objectionable these may otherwise be. The fact must not hi- lost sitiiit of that in tlie Galway Contraft, tlwre was iii'^crttd, ami -ur iln' i'n^i liinc ni .--ucli <'oniriji>, an rxjUi'ss li'/eiaration u;. Ii> the snb-iilv b( iii<: payabio out ol nioniiT to b.; miIi-iI bv I'ai lianioiit, anil thai iliis was spu'ially iimJer the cotisideiatioii of the coulraetors_^^ h^u Cihie like~-\ tiiis, wheru t!ie pulilie iaitli of tln' country is invulvcd, and vvnere, in aildition to the financial objet'tions as r.g.u'ils this i:ouuti\, grrai i;iier 'sis of others tiian the British people, whose GuveriuneiU has form d the contract, are suriou,-:ly affected, Your Ci^mmiitee conceive that the House of Coniinous may leL;iti- mi'.tely and fairly exercise, and may be bound to exercise its umloubtcd power, without giving further eftect to the eircunist.mce of the eotitnietor.s being free from blame, tluui by allowing them a just enm[!ensation, not indeed for heing dis- appointed of a favourable contract, but, for the actual loss to wliieli any inter- mediate expen(!itur( , tousi:(|uent on itie dilay of a ti'ial determination, may have subjected them. They would leftve it, tliorefore, to your Honourable House to consider whether the oircunistanees of this casi', so hilly detailed aitove, and minutely exhibited in the evidence taken by the Committee, do not warrant and ie(iuiio the exer- cise of that [)o\ver. If, indeed, an arrangement were effecteii by which the interests of Canada should be secured, the necessity for such a course might be obviated. But otherwise, it appears to your Committee, that the House of Commons should not, in the full knowledge of the facts and considerations overlooked by the I'lxecut.ive, iifford the means of inflicting a serious injury on one, and that uot the least loyal nor least imjwrtaut of her colouies. 0:. ': loyal i Your ' /<^ f our ocean till lowly )ei'iod ID, of to by itioas anJ aaiii- vern- iiatc nada, Lcross con- Q- 4051. Q. 4075-7. ( 13 ) Your Committee would, at the same time, heartily approve of whatever facility and encouragement the Government may see fit to give, for effecting a suitable arrangement, on the part of the contractors, by which the dums of Canada may be satisfied, while the expectations raised in tne minds of the people of Ireland are realised. From a review of the proceedings above detaiUd, the conclusion seems to Your Committee irresistible, that great defects exist in the means provided, under the present system, for bringing under the notice of the parties by whom such contracts are to be authorised all the materials and considerations which are essen- tial to a right judgment being come to. If these defects do not altogether excuse, they in a great measure account for the circumstance, that in sanctioning the contracts in question, such highly important considerations as have been above adverted to were entirely overlooked ; and they call for an immediate and effective remedy. Such a remedy will, in the opinion of Your Committee, be greatly facilitated >3 Vict., c 6. by the Act passed in the present Session of Parliament, since the Committee began its sittings, for transferring the enforcement of postal packet service con- tracts from the Admiralty to the Postmaster General, and by the arrangements entered into between the Treasury and the Post Office, with a view to the exer- cise, by the Postmaster General, of his new functions under it. The chief remedy, however, for the evils of the existing system will, in their opinion, be found in a more efficient control by Parliament, at a stage when that control can be freely exercised. At present, no opportunity arises for any consideration of a postal contract till a vote is proposed for the first payment under it Even, however, when that vote comes on shortly after the contract is entered into, there is nothing, if it be a renewal of an existing contract at the same subsidy (though in anticipation, by many years, of its natural term of expiry), to warn the House that any enange has taken place ; nor does an increased subsidy necessarily make the House aware of the fact, as the addition may be for a supplemental service merely grafted on that under the original contract. If, again, it be for 9 new service for whicii extensive preparation requires to be made, the vote may not fall to be asked for till after the lapse of a considerable period ; as in the case of tliis very Gal way Contract, which was entered into in February 1869, but the servicp under which dues not commence till June 1860 ; so that no occasion for a vote uf money could arise till the Estimates for the year now current should come before the House. In the interval, however, between the execution of a contract and the vote, contractors necessarily go on with their preparations ; building ships, and making different arrangements, involving expense, and, it may be, obligations of a serious nature ; so that when the question is raised on the vote, it is obviously impossible for the House of Commons to exercise its power of control with that freedom which is absolutely essential for the public interest, and the right performance of its high functions. Your Committee are fully alive to the evils that might result from any course of procedure which would open a door to a Parliamentary canvass, on behalf of competing offerers for a public contract ; but any risk of that kind is far more than counterbalanced by the necessity of Parliamentary control not being practically excluded in regard to so large a brunch of public expenditure. The amount of subsidies paid for postal packet service is now nearly a mil- lion a year, and tite addition of the Galway subsidy would raise it above the million, while the whole corresponding postal revenue is only about 393,600 /. Under particular contracts, too, the payment reaches 268,500 L, and it seems repugnant to the principles of the Constitution, that the Executive Govern- ment should be left to enter into contracts, binding the country for prolonged periods of future tiuic, and that, it may be, by anticipation, in the payment of sums so vast, without the possibility of any effective Parliamentary check, beyond a disapproval after the evil is done, and when, it may be, the Ministers by whom the contract has been entered into are no longer in office. The risk also of a Parliamentary canvass may be, as Your Committee think, in a great measure, if not altogether avoided, by arrangements which would, at «.46.— («).» D the ;i ( 1^ ) the same time, accomplish another, and, in itself, a most desirable object, namely, that of leaving on the Executive its full responsibility, in regard to the formation of these contracts. Your Committee would suggest that the whole transaction should be, as at present, fully completed by the Executive Government; that the contract should be entered into with the offerers preferred by them, and that it should be executed ; but that a clause should be inserted in every such contract, pro- viding expressly that it should not be binding unless either (l) it has been approved by Resolution of the House of Commons, or ''>), has lain on the Table of the House for a month without disapproval. In reality and strictly such contracts are, at present, subject to the approval of the House ; and the very proper practice recently introduced, by the late Govem- nment, of declariug the subsidies to be payable out of monies to be voted by Parliament has, in a great measure, warned contractors of the real state of the case. Any plea, however, of ignorance or misapprehension should be excluded by the insertion of the clause above suggested ; and the contract, when executed, should at once, and without waiting till a vote under it is required to be asked, be laid on the table of the House, accompanied by the report of the Postmaster General to the Treasury, and, if the Treasury have dissented from his recom- mendations, by a minute setting forth the grounds on which they have proceeded. It has been matter of consideration whether it will be enough to lay the papers before The House, on the footing that, after the lapse of a certain period, the approval of The House shaU be assumed, or whether a specific vote should in all cases be taken on a statement by the Minister. Your Committee incline to think that the object in view will be best obtained by the alternative course which they have suggested, while some practical difhculties would thereby be avoided ; but in whatever form this be done. Your Committee are satisfied that great benefit will accrue, not only directly, from the control of Parliament at a stage where that control can be freely and effectively exercised, but also in its indirect, though not less important, results. The certainty of an iiunicdiutc consideration by Parliament of the act of the Executive would tend greatly to secure a thorough attention to all the elements necessary for a right decision; and if any of these had been overlooked, it would aflford a certain means of having it immediately brought into view. Had the practice now recommended been in observance when the contracts which have formed the chief suLject of the Committee's remarks were entered into. Your Committee do not believe it possible that those evils could have occurred which they have brought under the notice of The House. It is true that emergencies might occasionally arise, by the unexpected break- ing down, for instance, of an existing service, or the sudden bursting out of a war, which might recjuire new arrangements, necessary to be entered upon with- out the delay that would ensue, if Parliament were not sitting, before these could be brought under its consideration. But tiie postal service is not in this respect different from the other services of the empire, in which, In special emergencies, expenditure unauthorised by Parliament becomes absolutely essential. In all such cases the Executive must take the rcsponsiijility of sanctioning whatever imme- diate urgency requires ; and it has never been found that Parliament exhibited any reluctance to supply the means of meeting such expenditure. There are no grounds for supposing that any snch su give to private parties any right to a j)oitioii of the public revenue. The old system of rarining the re\(nue shows the inconvenience of sucli a course, and whatever may be the teinis of a contract, the contractor will exercise the right, and not without a show of justice, of interfering ai.d renioustratiug on every inovemeut of tiie (luveriiiiiciit which might be supposed to atlect the amount of his retiiuue- ration. We doubt much the expediency of a running contract, terminable at a short notice. Independent of uncertainty, to wiiieh the contractor will be exposed, and which, of course, must be a subject of consideration to him when he makes his offer, we see other inconvcpienees. The system will either fall into a per- manent contract, from the disinclination of Government to disturb existing arrangements, or, if the power of terminating the contract is considered as real, there will be u danger of constant agitation by competing parties, and imputations of political jobbing, or, at least, inequality and caprice. With respect to the proposal to abandon precautions as to inspection, and stipulations respecting the number and fitness of the steamers to be employed, we woulii consider that great caution is necessary ; and where surveys for ascertaining the siiflliciency of vessels are required, we incline to think that recourse should be had, as iiitheito, to the Admiralty, rather than, as now proposed, to the Board of Trade. The system of inflexibly insisting on penalties has been tried, but the rcsul' scarcely mbi rants us in giving our sanction to the abandonment of the precau- tions liitlierio taken to ensure that a contractor should at least have adequate UK an? for the performance of his contract. We should recommend, therefore, that if Government should consider it advisable to adopt any of these proposals, an experiment should be made at first on a small scale, and the result ascertained before it be sanctioned as a general rule. In dosing our remarks on this part of our subject, wc cannot conceal our einvii tion that the well working of any system must depend on the careful attention of the Executive, checked by publicity, and the control of Parliament. Your Committee 'cannot conclude their Report without recording their con- cmrdice in the opinion expressed by the Taa^ury Committee of lno^i as to the piacticaliilitv of dispensing with subsidies altogetiier in cases where ordinary traffic supports several lines of steamers, and their conviction that, in the cir- cuit stances which have for some years existed in regard to the communication bftweeu this country and North America, no such subsidies are required to secure a regular, speedy, and efficient postal service. Many questions of interest, which do not fall within the terms of the reference, to ^'oiir Committee, have been incidentally and almost unavoidably brouf^ht ni der ti.eir notice; such as those regarding the comparative merits of pad I . ( 17 ) ,Wi„g .n, opinio. o„ '^f^T^ ^1^^!^^"'^'^^'^^^ different route., the coii.ideration »' "'"'" ';" T, 'to ntmnt tlii» LukiIk™''! now, ulong «ith the evidence """f*^. t'.tTuS bo Sc,,«' may te f-n.! in Report, fo, .he """-is; t :£dXlZ^ZlU»oJ, in . n,.„n.,- 11 remedy is required. »fe