52

F.-e

This clause appears to us to have the merit of simplicity, and the word '.' undue " would probably be held to provide for the rare occurrences to which reference has been made. Though a decision by the Railway and Canal Commission might be urged as preferable to a decision bj 7 an arbitrator, the Railway and Canal Commission could not have jurisdiction without fresh legislation, with its attendant delay. It may be a further matter of comment that the clause does not provide a remedy for its past infringement; but as the Postmaster-General for the time being, who would be one of the parties before the arbitrator, could not show loss, no liquidated damages could, we are advised, legally be payable to him ; and no liquidated damages could be secured to a third party except by making the Postmaster-General a trustee for the complainant —a provision which no business man on the one hand, and no steamship company on the other, would probably tolerate. Another comment has been made to the effect that the object in view would be well attained by forbidding what is known as the rebate system, described in paragraph 28 of the steamship subsidies report, 1902, but we doubt whether such an interference is practicable. We have to add that Sir Thomas Blomefield, the member of our Committee representing the Board of Trade, was instructed to dissent from the procedure for arbitration suggested in the second half of the above clause, but all the other members of the Committee felt that the matter is essentially one which ought to be taken up by the Board of Trade. 20. (vii.) Special Privileges for Government Passengers and General Comforts. —In several respects advantages are given in connection with Government individual passengers under the existing mail contract of the Peninsular and Oriental Company. Thus a limited number of thirdclass passengers is carried by all steamers and is provided for in accordance with the Transport Regulations, although in the company's ordinary trade third-class passengers are not carried at all. Next, a certain number of berths of each class is reserved for the Government on payment of the regular fare, but the full Government allowance of baggage is carried free, which is far in excess of the private allowance as regards first-class passengers.. And among one or two other privileges, special facilities are given for the conveyance of small Government parcels and limited quantities of Government stores by all steamers. All these stipulations in the contract have our general approval. Outside the contract, the steamship company has given a reduction for large numbers of officers travelling at one time or over a limited period; but no fixed reduction is obtainable, such as that of 15 per cent, given by the French Messageries Maritimes to every military or naval officer or every consul, or of 20 per cent, granted by German subsidised companies as a condition of their mail subsidy. It is, however, material to recollect that fully two-thirds of tinPeninsular and Oriental Company's Indian passengers are Government officials, whilst foreign Government officials travelling by foreign lines to the East are comparatively few; and Sir Thomas Sutherland declines on behalf of the Peninsular and Oriental Company to make a reduction unless his subsidy is increased pro tanto. The effect of this increase would be that if a percentage for Government passengers were taken off tickets of passengers travelling at the public expense the nation would gain that percentage, which it previously itself paid by increasing the mail subsidy ; but if a percentage were taken off the tickets of Government passengers travelling at their own expense the nation is making those passengers a present of the percentage. Neither result seems to us satisfactory. We are informed that the Peninsular and Oriental Company gives to certain booking agencies a reduction of 5 per cent, on the value of the tickets by way of commission, and we consider it desirable that in the case of Government passengers the Government should receive a similar reduction of rates; but we see no advantage in obtaining that reduction merely byincrease of the mail subsidy. With regard to clause Bof Schedule 2of the Peninsular and Oriental contract, we think that officers in His Majesty's service booking their passages directly from the company should be allowed the same reduction as that given to Government passengers. In respect of general comforts, such as the installation in the cabins of electric fans and the like, these matters do not appear to us of such a nature that they need to be made express conditions of the payment of a subsidy in a mail contract, though it is important that any mail company should keep as fully up to date as its foreign competitors. 21. (viii.) What is the best Means of Conveying the Eastern and Australian Mails, in consequence of the Decision of the Australian Legislature to make no Mail Contract with Shipping Companies employing Coloured Labour? — His Majesty's Government informed the GovernorGeneral of Australia by a despatch in April, 1903, that they much regretted that, as such legislation principally affected His Majesty's Indian subjects, no other course was left open to them than to be dissociated in future from the Government of the Commonwealth in any mail contract. The Government of the Commonwealth accordingly itself advertised for tenders last September for a fortnightly service with the United Kingdom, beginning in 1905, for seven years, or five years at the option of the tenderers, and the tenders had to be received not later than the 31st January, 1904. We are, of course, unable to say at present what response has been made to this invitation, but in any case the action of the Commonwealth Government assists the policy we have advocated in paragraph 6, of asking for sectional tenders. If this division of the mail service into sections does not increase its total cost, which appears by no means necessary, an obvious disadvantage of dividing it is the more frequent transhipments, with their inseparable delays and opportunities for theft; but we believe the disadvantage of transhipment may be more than counterbalanced by the competition created, and the larger number of good British fleets encouraged. The experiment is well worth trying again thoroughly. Even if suitable sectional tenders are not forthcoming, the policy of asking for them is unexceptionable, and the outcome, whatever it be, must be a test of what is the best contract for the nation in all the circumstances. We have partly been led to recommend an extension of the Peninsular and Oriental contract for three years, so as to give all ship owners and companies an ample opportunity of considering the new conditions with a viewto tendering, and building new ships if required. 22. In answer to the reference to our Committee, and bearing in mind the decision of the Australian Government against coloured labour, we therefore think that the best means of con-