Part 6

2276. But are the facts true; yes or no. I have collected the facts from your previous answers, and am putting them to you again; if any one of them be inaccurate, point out the one which is inaccurate?--You ask whether she was rejected in 1841; she was. But allow me to give the reasons.

2277. Was she rejected for the service between Suez and Calcutta in the year 1841?--She was refused to be received under a certain engagement.

2278. Did the East India Company, in the year 1841, refuse to accept the “India” steamer for the line between Suez and Calcutta?--Yes, but that had no reference to her capacity as a mail steamer.

2279. Be so good, then, as to explain the difference between the two cases?--The difference was this: in 1841 it was the voluntary proposition of the Peninsular and Oriental Company to undertake the communication between Suez and Calcutta, with vessels of 520-horse power; it was not for a mail contract, a mail contract not being necessary; and they put in the 520-horse power with the intention, I believe, of shutting out the “India” and other vessels. It was for a passenger line, not for a mail line, because the same mails were carried by Government vessels to Bombay, and therefore there was no necessity for a mail line, or for her service as a mail packet; but it had been an object of great consideration, both by the Government at home and the inhabitants of India, to have a passenger communication with Calcutta the same to which the remuneration had been promised. The “India” was on the spot, about to establish that, and the “Precursor” was being prepared to extend it; the Peninsular and Oriental Company came in with an engagement to do, for, apparently, a very small sum, what those vessels were then about doing; that was for the purpose of maintaining the passenger communication between Calcutta and Suez. They offered to do this with vessels of 520-horse power as a passenger line, which was, of course, a good deal better than doing it with vessels of 300-horse power, because the object was the accommodation of passengers, and, no doubt, a vessel of 520-horse power must have a great deal more accommodation for passengers than one of 300-horse power; and therefore, in asking the East India Company to accept a vessel of 300-horse power, instead of a vessel of 520-horse power, they were simply asking them to take a very considerable sum off their engagement. That was a very different thing from carrying the mails, which the “India” might have done; and, in fact, the experience of one year has proved that she was capable of doing it.

2280. You having stated your view of the reasons which influenced the East India Company, whether you are right in your view of those reasons or not, the fact was, that the steamer “India,” being pressed upon the East India Company by the Peninsular and Oriental Company, was rejected; is that so?--I understood that she was rejected, because it was not----

2281. Whatever were the reasons, was the fact so?--Yes.

2282. And your opinion was, that the Admiralty ought to have made in 1844 a different set of conditions, which would have included the steamer “India?”--I think the Admiralty, having the plans and specifications of the ship “India” before them, ought to have judged from them as to the sufficiency of the vessel, and not from the nominal horse power.

2283. Do you think that if a public department, instead of laying down specific rules to which all parties must conform who make engagements with regard to the specifications of particular vessels, that would be a better mode of excluding favouritism than the mode which is now pursued?--Most assuredly it would be a proper mode.

2284. Am I right in understanding that the “India” was, afterwards, employed upon this very line by the Peninsular Company?--Yes, and they got £15,000 a year by her. They bought her for less than £15,000, and they patched her up for £1,000, and then got her surveyed in 1845, and she remained for two or three years in the contract ready to be employed, after being so patched up.

2285. Was she there as a reserve vessel?--Yes.

2286. Was there any difference in the specification of horse power for a reserve vessel, in comparison with the vessels which were to carry the mails regularly?--Yes, there was a difference, and she was admitted upon that.

2287. What was the amount of horse power required by the contract for a reserve vessel?--I suppose it must have been less than 300-horse power.

2288. Have you seen the contract?--Yes, but I do not recollect whether it was 300 or 250-horse power.

2289. Is it not customary that the reserve vessel is of less tonnage than the vessels which are regularly performing the voyages with the mails?--Yes, it is so, and we intended her to be so originally.

2290. When you tendered the “India,” did you propose her as a reserve vessel, or as one of the regular vessels to carry the mails?--We proposed her for the China line.

2291. You never proposed her for this line at all?--We could not.

2292. With reference to the Ceylon and Hong Kong contract, in the year 1844, did you tender the steamer “India” for the Ceylon and Hong Kong contract?---Yes.

2293. Your intention being that the mails should be carried as far as Point de Galle by the Peninsular and Oriental Company, and taken up at that point by you, and carried in your ships to Hong Kong?--Yes.

2294. How many vessels would that service have required?--It would have required three vessels.

2295. How many vessels were you in possession of, at that time?--We had one vessel.

2296. Where did you intend to get other vessels from?--We offered to hire them in India, where we had four or five at our disposal.

2297. You said the other day that it was not possible for you to guarantee any particular vessels in the Indian Seas as being obtainable by you for that purpose?--We stated in the tender that we would hire such vessels as we could procure, but we could not do that, because no time was allowed.

2298. You said the other day that the “India,” being a paddle ship, and over-built, was not particularly well qualified to deal with the typhoons in the China seas?--She was not the vessel that I would have chosen.

2299. You also told us that you had in your eye, as one of the other vessels of the contract, a steamer which had gone to China in the year 1830?--Yes.

2300. Will you be so good as to state what, according to your intention, was to have been the third ship by which the contract was to be performed?--The tender states that two vessels were to be built within a year for that purpose.

2301. But, speaking of time present, you intended to employ the “India,” and to take the chance of a steamer which went out to China in the year 1830, and to take the risk of your being able to pick up a third vessel; was that your intention?--Yes; but a company, of which I was a large proprietor, had five ships in India besides the “India.”

2302. Was that company, of which you were a large proprietor, able to guarantee that there would be other vessels to perform the contract?--Certainly. I made this tender quite certain that they would be very glad to employ their vessels there.

2303. Why, then, did you say, in answer to question 1931, that you could not guarantee any vessels?--If we had not time to offer it to them, and get an answer from them, I cannot say that they might not turn round and refuse to let us have the vessels.

2304. Did you expect the Admiralty, in the absence of any guarantee, to form a contract with you to take the “India,” which in your judgment was bad of her kind, as one ship, and to take a steamer which went to China in the year 1830, and which you thought you probably could get as a second ship, and the chance of some third ship then in the Indian seas; upon that basis, did you expect the Admiralty to form a contract with you; was that so?--What I expect is stated in my former evidence.

2305. The “India” lay for a long time for sale in the London docks, did she not, in 1839?--I think, for three or four months, she lay there for sale.

2306. Was she not put up for sale at Lloyd’s?--Yes, I believe she was.

2307. Who were the owners of the “India” when she sailed for India?--An old gentleman from Norfolk, a Mr. Banyan, was the registered owner.

2308. He was not the real owner?--Yes, he was a real owner; she belonged to a company got up by Captain Ross, and he represented them.

2309. When she went to India, was she not mortgaged?--Yes, she was.

2310. To what amount?--She was under two mortgages, I understood, but what the other mortgage was I do not remember. There was $20,000 advanced to the builders, as stated in answer to question 1814; but she was not under mortgage when I tendered her for contract mail service. The real owners were some forty residents and natives in India, and seven firms and individuals in England, who purchased her from the mortgagees, and established the India Steam Company of Calcutta in 1841.

2311. You have stated that the “India” has been running on the line between Calcutta and Suez?--I never said that she was running on the line; she was employed on the line; she was receiving a certain portion of the money paid for the contract. I suppose about £15,000 a year would be her proportion.

2312. Are you aware that she never left her moorings?--Yes.

2313. The Peninsular and Oriental Company bought her, did they not?--Yes; after a desperately hard bargain.

2314. Are you aware that she was full of dry rot at the time they bought her?--Yes, but I am aware that they deducted £1,300 from the £15,000 which they engaged to pay, in consequence of that; and I am also aware that they told me it would require £15,000 to repair her when they offered £23,000 for her; and I sent in the same drawings that I had sent in to the Admiralty, and offered to do it for £8,000, upon which they said, we will give you £15,000.

2315. Are you aware that the “India” has been broken up?--I never heard it till now.

2316. You stated that the Peninsular Company sent out to the China line two old vessels?--Yes, they were used in the Peninsular lines.

2317. What were their names?--The “Lady Mary Wood” was one, and the “Braganza” was the other.

2318. Are you not aware that in 1844 the “Lady Mary Wood” was only two years old?--Yes, I know it perfectly.

2319. Would you call her an old vessel?--Yes, she had been a good deal used there; the best proof of her age is, that she was inefficient before she could be relieved.

2320. How do you know that?--I have heard so.

2321. Are you aware that the “Braganza” was within a few months of the same age as the “India?”--I do not know that; I know that she had some repairs before she went there; such repairs as I should have given the “India.”

2322. You said that you expected to hire in India a vessel called the “Fire Queen?”--I never said a word about the “Fire Queen;” the “Fire Queen” we had nothing to do with; the vessels which I mentioned are mentioned here.

2323. It is in the answer to question 2135: “In Bengal, the ‘Forbes,’ ‘India,’ ‘Dwarkanauth Tagore,’ ‘Henderson,’ and ‘Gordon;’ at Singapore, ‘The Royal Sovereign,’ ‘Express,’ and ‘Windsor Castle;’ on her passage out to India, the ‘Fire Queen,’ built for a Calcutta Company?”--If you look you will see that those are mentioned as the ships that are in India, I did not say that I had them; that is a quotation from a letter to Mr. Sidney Herbert, stating that there are those vessels there.

2324. But the India Steam Company possessed no other vessel than the “India,” did they?--No.

2325. In one of your answers you stated first, that “no honest man,” which you afterwards qualified by saying, “no man intending to act honestly, would sign a contract with such stringent clauses and penalties for over-times on arrivals?”--I did not say, “no honest man” would sign it. I said that you would not like to undertake such things, if you could not honestly undertake to do them.

2326. Did you allude to the penalties for non-arrival in proper time?--Yes.

2327. I suppose you have read these contracts attentively?--Yes.

2328. And know them by heart, probably?--No, I do not think I know them by heart.

2329. Has it escaped you that there is this clause in the contract: “The contractors are not to be liable to any penalties under this contract for any matters arising from circumstances over which they and their servants had not and could not have had any control, and which shall be so proved to the satisfaction of the said Commissioners?”--I do not recollect that particularly; there was some such clause.

2330. Did you ever see that clause before?--I see that if a vessel should have a very foul wind and could not get on, that clause would perhaps meet that case. But there are a great many causes from which an engine might break down, which would not be provided for by that clause.

2331. You particularly specified stringent clauses, and alluded to the penalties for arrival after time; you said that the clauses were so stringent that no honest man, or no man intending honestly, would sign the contract, because there were penalties for arriving over time?--I was speaking then with reference to the tenders, which I got in 1840. This is the contract I was speaking of. I saw that the first condition was, that they were to be properly built and efficient vessels of 400-horse power; and then there are a number of clauses which I have marked here; the result of them is, first, that the contract was to provide for the passages being performed in a certain number of hours, under a penalty of £500 for twelve hours’ delay.

2332. With such a clause as that you would be afraid to make such a contract?--It exactly amounts to what I say; it is of no use to put such a condition into a contract, except to keep people away.

2333. In answer to a question put to you by the Chairman (1816), which was, “Whatever the nature of the arrangement between the India Company and the Peninsular Company was, the result is that they received £20,000 a year for five years, from the spring of 1841, for doing certain services; is that so?” you answer, “Yes.” Is that answer correct, that for five years they received £20,000 a year?--That is a mistake; they were to receive that.

2334. For how many years did they receive that £20,000 under the letter of the East India Company?--For two years.

2335. You have been speaking about screw vessels; did you ever command one?--No.

_Inspection of the Company’s Affairs by the Government._

It will have been observed, from the evidence of Mr. Croker of the Admiralty (see page 27), that in consequence of the Directors offering to the Government the permission to investigate the accounts and books of the Company, the Admiralty appointed Capt. A. Ellice, R.N., the comptroller of steam machinery, and previously superintendent of the packet service at Southampton, together with Mr. W. H. Bond, an experienced accountant, connected with the civil department of the naval service, to make that Investigation. The following is their Report, which, although it was considered by the Admiralty as a confidential one, and therefore not to be published without the consent of the Company, the Directors had no hesitation in permitting to be produced to the Committee, and which has, accordingly, been published in the Appendix to the Committee’s Report.

_Report by_ CAPTAIN ELLICE _and_ W. H. BOND, _on the Peninsular and Oriental Steam Packet Company_.

SIR, Admiralty, 17 June, 1848.

In obedience to their Lordships’ instructions of the 30th ultimo, I have inquired into the matters therein mentioned respecting the Peninsular and Oriental Contract Steam Packet Company, having called to my assistance, for this purpose, Mr. W. H. Bond, purser of her Majesty’s navy; and I have now the honour of enclosing the Report thereon for their Lordships’ information.

H. G. Ward, Esq., (Signed) A. ELLICE. &c., &c., &c.

* * * * *

This Report being founded on certain documents which were confidentially placed in my hands, I consider that this Report should be confidential also.

(Signed) A. E.

* * * * *

Admiralty, 16 June, 1848.

In compliance with the instructions of the Lords Commissioners of the Admiralty, contained in their minute of the 30th ultimo, “To ascertain whether the profit of the voyages between Southampton, Malta, and Alexandria, have been such as would provide a dividend of 10 per cent. per annum on the capital, after the ordinary deductions of wear and tear, and sea risk of vessels,--if the directors had not thought fit to invest a portion of their profits in the extension of the stock, by the purchase of additional vessels:”

“Also to endeavour to institute a comparison between the expenses of carrying on the mail services by the company, and those which are incurred by her Majesty’s naval service in similar duties:”--Application was made to the directors of the Peninsular and Oriental Company to furnish a copy of the balance-sheet for the last half year, ending the 1st March, 1848, together with such other documents as would serve to explain the various items contained in it. These being furnished, the readiest access was afforded to the ledger and other books of the company, for their verification.

As these accounts are kept so as to include all the operations of the company, without distinguishing the profits on the different branches, it became necessary, in order to carry out the spirit of their Lordship’s instructions, to inquire into the state of the company’s affairs generally; and to conduct this inquiry in such a way as to arrive at a satisfactory conclusion on the following points:--

1. Whether the postal duties performed by the Peninsular and Oriental Steam Company are proportionate to the amount paid for those duties.

2. Whether such duties can, with advantage, be transferred from the contract steam vessels to those of her Majesty’s navy.

3. The propriety of throwing these duties open to public competition.

4. The expediency of accepting the Peninsular and Oriental Company’s proposal for a modification of the terms of the contract.

Upon these important points the most careful and mature consideration has been bestowed; all the documents have been closely examined and compared with the books of the company, and the following are the results which are submitted for their Lordships’ information:--

First. That the amount paid to the Peninsular and Oriental Company for the duties it has performed has not hitherto been more than it was justly entitled to receive, on the principle that the shareholders are entitled to a fair commercial profit on the capital invested in the undertaking, and admitting that the affairs of the company have been managed, as they appear to have been, with economy and efficiency. The dividend hitherto made has never reached the amount of 10 per cent. per annum, and the additions made to their shipping and other capital are from reserves to meet contingencies. The principles on which these reserves have been laid aside, instead of being divided as profits, will be hereafter explained in this report.

Second. That the present inadequate means of ascertaining the expense of her Majesty’s steam vessels, especially in the Indian and China seas, renders it difficult to determine the comparative pecuniary results which would follow the transfer of the duties. Considering, however, the difficulty of adapting her Majesty’s vessels to commercial purposes, accommodation of passengers and freight of merchandise, and the superior convenience and advantages of mercantile companies in these respects, the success or expediency of such a change is exceedingly doubtful, except on a necessity, arising from exorbitant demands for carrying the mails by contract.

Third. Considering that the postal duties have been well and satisfactorily performed; that the company has never been fined for any breach of contract; that it has never asked for any increase of remuneration, or decrease of the duties to be performed, as has been the case in other instances of contract with companies; considering, also, the energetic manner in which this company has persevered in extending steam communication through new and untried channels, and that it has formed extensive establishments on the faith of the continued support of the Government, and that it still contemplates an extension of its communications with the farthest southern and eastern point of the British possessions; establishing for these proposes a steam navy of considerable magnitude, at the command of the public, on any emergency,--it appears to be entitled to as much consideration as is compatible with an economical administration of the duties of the Post-office.

Fourth. That for reasons hereafter suggested, the contract may now with great propriety be brought under conditions more favourable to the Government; and that this may be done either by a fixed reduction for a permanent term, or on a scale varying with the profits of the company.

In either case it will appear essential that any new arrangement to be made should rather be of a permanent than of a temporary character, both to ensure confidence to the company in the conduct and extension of their concerns, and efficiency in the discharge of the service entrusted to them.

The reasons for adopting these results, which are submitted with great deference to their Lordships’ consideration, are founded upon facts contained in the following statement:--

First: As regards the duties performed, and payments made.

The annexed table, No. 1, shows the routes, distances, and amounts of the existing contracts. Of these, the third route has been recently transferred to Government vessels. From this return it appears that hitherto the company has been paid the sum of £224,525, which, however, has been reduced by this transfer to £209,000.

For the performance of these duties, and the other business of the company, the establishment of vessels detailed in the annexed table, No. 2, is in efficient operation, with the exception of the “Ariel,” recently stranded in the vicinity of Leghorn.

The original project fixed the capital at £1,000,000, but the amount paid up was, and remains, at the sum of £973,378 16s. 8d. In addition to this capital, reserved amounts have been credited, arising from undivided profits, under the heads of “Repair,” “Insurance,” and “Depreciation” funds, amounting to £306,424 19s. 2d., as will be seen by the annexed statement, No. 3.

The balance-sheet of the company, No. 4, shows the last half-yearly expenditure to amount to £238,404 19s.; and the receipts, including the amount paid by the Government for the conveyance of mails, £301,034 10s. 2d.

Some idea of the extent of this establishment may be formed from the following items of expenditure:--

For the half-year ending the 31st March last, the company disbursed for the shipping department alone--

£ _s._ _d._ Coal 93,568 2 4 Oil and tallow 2,687 14 0 Victualling seamen 16,501 14 6 Wages to seamen 29,383 6 0 Incidental expenses 8,114 1 11 Chartering hired vessels 6,326 12 0 ---------------- £158,581 10 9 ----------------

The receipts under the following heads, for the same periods, amounted to--