Chapter 15

"Another contract has recently been entered into, as I am informed, for two ships to run between Bermuda and New-York. The West-India line, in consequence of some disasters during the first years of its service, was relieved from touching at the ports of the United States; but in the spring of last year it was required to resume its communication with New-Orleans, and is at any time liable to be required to touch at the other ports on our coast which I have named. Thus it will be perceived that this system of mail steam-packet service is so arranged as not only to communicate with Canada and the West-Indies, the ports on the Spanish Main and the Gulf coast of Mexico, but also to touch at every important port in the United States, from Boston to New-Orleans.

"These three lines employ twenty-five steamers of the largest and most efficient description, where familiarity with our seaports and the whole extent of our coast would render them the most formidable enemies in time of war. It is scarcely possible to imagine a system more skillfully devised to bring down upon us, at any given point, and at any unexpected moment, the whole force of British power. More especially is this true with respect to our _southern_ coast, where the great number of accessible and unprotected harbors, both on the Atlantic and the Gulf, would render such incursions comparatively safe to them, and terrible to us. And when we reflect that the design of this system is, that it shall draw the means of its support from our own commerce and intercourse, we should surely have been wanting in the duty we owed to ourselves and to our country, if we had failed to adopt measures towards the establishment of such an American system of Atlantic steam navigation as would compete successfully with it."

Previous to the renewal of the several foreign mail contracts, in 1850, the Treasury ordered, 26th April, 1849, the formation of a Committee in these words: "_Ordered_, that a Select Committee be appointed to inquire into the CONTRACT PACKET SERVICE." That Committee was composed of Sir James Hogg, Mr. Cardwell, Sir Wm. Clay, Mr. Cowper, Mr. Alderman Thompson, Mr. Fitz Roy, Mr. Hastie, Mr. Mangles, Mr. Thomas Baring, Mr. Bankes, Mr. William Brown, Mr. Childers, Mr. Wilcox, Mr. Crogan, and Mr. Henley. Mr. Elliot was added in the place of Mr. Baring. The Committee sat seventeen days, and examined fifteen witnesses under oath, many of these being commanders in the Navy, Secretaries, Presidents, and engineers of the Companies, and other eminent men in steam. Mr. Cunard was among the witnesses. After taking evidence and papers extending over about seven hundred and eighty-three octavo pages, they said in their report, after recommending that great care should be exercised in making all future contracts:

"1. That so far as the Committee are able to judge, from the evidence they have taken, it appears that the mails are conveyed at a less cost by Hired Packets than by Her Majesty's Vessels.

"2. That some of the existing Contracts have been put up to public tender, and some arranged by private negotiation; and that a very large sum beyond what is received from postage is paid on some of the lines; but considering that at the time these contracts were arranged the success of these large undertakings was uncertain, Your Committee see no reason to think that better terms could have been obtained for the public."

This investigation was made to enable the Government to proceed intelligently with the many contracts which were to expire in 1850; and its immediate consequence was, not only the renewal of all the old contracts with the same parties at the same or larger pay, but the establishment of several new services.

The British system had operated to the very highest satisfaction of the public and the Government for twenty years, until 1853, as it has done ever since; but at that time it was put to a second and very severe test. It had been suggested, probably by the Lords of the Admiralty, who had to pay the bills from the Naval fund, that the packet system was too costly, and should be remodelled, and perhaps reduced. Complaint was thus made to the Chancellor of the Exchequer, who, in a Treasury Minute, dated March 1, 1853, says:

"Important as it is to secure rapid and certain communication with the remote dependencies of this country, and with other distant states, for national purposes, it is doubtless, under all common circumstances, from commercial considerations that such facility of correspondence derives its highest value."

"Her Majesty's Government conceive the time to have arrived when the entire charge of the packet service should be deliberately examined and reviewed, with joint reference to the questions--how far the purposes with which the present system was begun have been accomplished--how far the total amount of service rendered to the State is adequate to the total annual expense--how far there may be cause for a more than commonly jealous and scrupulous consideration of such further schemes of extension of the system as particular interests or parties may press, or even such as public objects may recommend from time to time; lastly, how far, on account of the early period at which certain of the contracts are terminable, or on account of requisitions put in by the contractors themselves for the modification of the terms, or for any other reason, it may be prudent to entertain the question of any revision of those terms, or of laying down any prospective rules with regard to them; such only, of course, as may comport with the equitable as well as the legal rights of the parties, and may avoid any disappointment to the just expectations of those classes who may have felt a peculiar interest in the establishment and extension of these great lines of communication."

After remarking that some of the vessels of some few Companies were unfit for purposes of war, the "Minute of the Treasury," in instructing the Committee, further says:

"At the same time, it is not to be conceived that, on account of this failure in a portion of the design, the country has cause to regret having paid a larger price than was intended to be paid simply for the establishment of these noble chains of communication, which well nigh embrace the world. The organization of a complete postal system upon the ocean, with absolute fixity of departures, and a general approach to certainty in arrivals, was a great problem, of high interest and benefit, not to England only, but to all civilized countries; and this problem may now be said to have been solved by England, for the advantage of mankind at large. It was to all appearance altogether beyond the reach of merely commercial enterprise; and if the price paid has been high, the object has been worthy, and the success for all essential purposes complete."

As a consequence of this "Minute," the Lords Commissioners of Her Majesty's Treasury appointed a Committee, consisting of Viscount Canning, Post Master General of Great Britain, as President; Hon. Wm. Cowper, on behalf of the Board of Admiralty; Sir Stafford H. Northcote, Bart.; and Mr. R. Madox Bromley, Secretary to the Board of Audit. The Committee organized, examined the Evidence and Report of the Committee of 1849, also the three large volumes of Evidence and Report taken by the Committee in 1851 on "Steam Communication with India and Australia," and the many elaborate documents of this class published by the Admiralty. After discussing thoroughly all of the political, financial, commercial, ethical, and social questions connected with rapid steam mail communication, they made an elaborate and detailed examination of all the contracts existing with the Government, and of the affairs of the various companies, with a view to deciding whether the ocean mail service should be abridged, or continued, or extended. They reported to both Houses of Parliament, July 8th, 1853. The conclusion of the Committee was, not only that the present service was demanded by every interest of the country and should be sustained, but that it should be judiciously extended, so as to meet all of the wants of the British public of whatever class. As elsewhere remarked, the new line established last year to Australia and India, at a cost of $925,000 per annum, for seven years, was a legitimate result of that test and that report, made in the most searching manner by the very ablest men of the kingdom; and this, notwithstanding the reports purposely circulated in this country every few years that Great Britain intends abandoning her steam mail system. She will abandon that system, as her practice plainly indicates, only when her people shall have discovered some means of making and preserving wealth without effort, enterprise, commerce, or manufactures. (_See page 99, Mr. Atherton's Reply._) The Report says:

"Before the application of steam to the propulsion of ships, the contracts were often made for short periods, the Government being able to find, among the vessels already employed in trade, some of speed sufficient for the purpose; but when it became requisite to dispatch the mails by steam, the ordinary supply of trading vessels would no longer suffice, and the Government had to call into existence a new class of packets.

"The postal service between England and the adjacent shores of Ireland, France, and Belgium, was at first performed by steam packets belonging to the Crown; but for the longer voyages it was thought better to induce commercial companies to build steamers; and with that view the contracts were at first made for periods which, unless previously terminated by failure to fulfill their engagements, would secure to the company the full benefit of their original outlay, by continuing the employment of their vessels until they might be expected to require extensive repairs, or to become unfit for continued service. In 1837 steam communication was created with Portugal and Gibraltar; in 1840 with Egypt, with the West-Indies, and with North-America.

"When the public interest requires the establishment of a postal line on which the ordinary traffic would not be remunerative for steamers, the subsidy to be allowed in the contract may be ascertained either by the test of public competition, or by calculating the amount which, on an estimate of the probable receipts and expenditure, will cover the deficiency of receipts, or by comparing it with the cost of war vessels if employed for the same purpose."

"The objects which appear to have led to the formation of these contracts, and to the large expenditure involved, were--to afford a rapid, frequent, and punctual communication with those distant ports which feed the main arteries of British commerce, and with the most important of our foreign possessions; to foster maritime enterprise; and to encourage the production of a superior class of vessels which would promote the convenience and wealth of the country in time of peace, and assist in defending its shores against hostile aggression.

"These expectations have not been disappointed. The ocean has been traversed with a precision and regularity hitherto deemed impossible--commerce and civilization have been extended--the colonies have been brought more closely into connection with the Home Government--and steamships have been constructed of a size and power that, without Government aid, could hardly, at least for many years, have been produced.

"It is not easy to estimate the pecuniary value of these results, but there is no reason to suppose that they could have been attained at that time at less cost."

After noticing the objects of the postal contracts, the Report says, in speaking of their results:

"To show what the system is capable of accomplishing, it will be sufficient that we should call attention to the two great lines of communication which have been opened, the one between this country and India, the other between this country and America. The mails are dispatched twice a month in the one case, and once a week in the other, and are conveyed to their destination with a regularity and rapidity which leaves nothing to be desired. The time occupied in the voyage to and fro between England and Bombay, which, before the establishment of the Overland Route, averaged about 224 days, is now no more than 87 days; and the time occupied in the voyage to and fro between England and the United States, which before 1840 varied from 45 to 105 days, is now reduced to an average period of 24 days. Nor is the service simply rapid, it is also regular; and the mercantile community can reckon with the utmost certainty on the punctual departure of the mails at the appointed times, and can also calculate with great precision the times of their arrival.

"The same results have not been so conspicuous on some other postal lines; but, taking the service as a whole, it has undoubtedly been brought to a high state of excellence, and its value to the country, both politically and commercially, is very considerable."

In speaking further of the objects of the Government postal service, after inquiring whether the foreign mail service should be extended any further, it says:

"The object of the Government in undertaking the transmarine postal service, whether by packets or by the system of ship letters, is to provide frequent, rapid, and regular communication between this country and other states, and between different parts of the British Empire. The reasons for desiring such communication are partly commercial and partly political. In cases where the interests concerned are chiefly those of commerce, it is generally more important that the postal service should be regular, than that it should be extremely rapid, though of course rapidity of communication, where it can be obtained without sacrificing other objects, is of great advantage. It would clearly be the interest of persons engaged in an important trade, provided there were no legal impediment in the way, to establish a regular postal communication in connection with it, even without aid from the state. This, however, would not extend to many cases in which there are political reasons for maintaining such services, while the commercial interests involved are of less magnitude. _Nor is it probable that private communications would be nearly so rapid as those directed by the Government; for a high rate of speed can only be obtained at a great expense, which will generally be found to be disproportionate to the benefits directly received from it, unless under peculiar circumstances of passenger traffic._ Lastly, it is to be considered that there are several services which, if they were not carried on by the British Government, would probably be undertaken by the Governments of foreign states, and that it is not likely that private individuals or associations would in such cases enter into competition with them.

"From these considerations we infer that, even upon the lines in the maintenance of which the greatest commercial interests are involved, private enterprise can not be depended upon for providing a complete substitute for Government agency; while it is clear that in others, where regular communications are desired solely or chiefly for political purposes, such agency is absolutely indispensable. _It is, however, obvious, that to establish a Government system in some cases, and to leave others wholly to private persons, would cause much inconvenience._ The conclusion therefore follows, that it is right that the Government should have the management of the whole of the transmarine postal communication, as it also has that of the communication within the country.

"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 L822,390, the sums received for postage upon these lines can not be estimated at more than L443,782."

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 L325,000 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 L240,000 a year, and brings in no more than L56,002, (as is the case with the West-Indian packets,) or one for which L25,000 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."