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  AN ABSTRACT
  OF THE
  PROCEEDINGS OF THE SELECT COMMITTEE
  OF THE
  HOUSE OF COMMONS,
  APPOINTED SESSION, 1849,
  TO INQUIRE INTO THE CONTRACT PACKET SERVICE;
  IN SO FAR AS THE SAME RELATES TO THE
  PENINSULAR AND ORIENTAL STEAM
  NAVIGATION COMPANY;
  WITH AN
  INTRODUCTORY STATEMENT AND REMARKS.

  Presented to the Court of Directors.

  ABSTRACTED AND PRINTED FOR THE INFORMATION OF
  THE PROPRIETORS OF THE COMPANY.

  _November, 1849._


As the circumstances connected with the origin and progress of the
Peninsular and Oriental Steam Navigation Company, and particularly with
its employment in the Contract Mail Packet Service, are but imperfectly
known to a great proportion of the present Proprietors; for their
better information it has been deemed advisable by the Directors to
authorise the printing and circulation of the following Statement and
Abstract.

References, it will be found, are occasionally made to parts of the
proceedings of the Select Committee of the House of Commons, which have
not been printed in this pamphlet, because they would have rendered it
too bulky for convenient perusal. But those who may wish to examine
these proceedings at length, can procure the Parliamentary Blue Book at
Hansard’s offices for the sale of Parliamentary Papers.




AN ABSTRACT,

_&c., &c._


In their last Report, presented to the Proprietors at the general
meeting held on the 31st of May last, the Directors stated that a
Committee of the House of Commons had been appointed, “to inquire
into the Contract Packet Service;” and expressed “their satisfaction
that such an inquiry had been instituted, feeling, as they did, that
as far as the interests of this Company were concerned, it would have
a beneficial tendency, by eliciting facts connected with the origin
and progress of the Company, and its employment in the Contract Mail
Service, which could not fail to show the important national benefits
which it has been the means of realising, and its consequent claim to
public support.”

It is no doubt known to some Proprietors of the Company, that for
several years past statements have been made, and circulated with
untiring pertinacity, to the effect, that the Contracts made by the
Government with this Company for the Mail Packet Service had been
obtained through undue favouritism, or corrupt jobbing[1]--that fair
competition had been denied to other parties,--and that the Company
had, in consequence, obtained a much larger remuneration for the
Service than ought to have been given, and were deriving enormous
profits from it.

Although the Directors were aware that these misstatements had obtained
some attention, even in influential quarters, they probably did not
consider it was consistent with the eminent position which the Company
occupies to take any legal proceedings against, or to enter into any
public controversy with, the parties who had been chiefly instrumental
in propagating them.

The forbearance of the Directors has led to a highly satisfactory
result. The continued propagation of these misstatements at last
attracted the attention of a member of the House of Commons so far as
to induce that honourable gentleman to move for a Select Committee to
inquire into the Contract Packet Service.

Although the Committee was moved for and appointed ostensibly to
inquire into the Service generally, its principal object was, as is
sufficiently obvious from its proceedings, to investigate the Contracts
and transactions of the Peninsular and Oriental Company. And the
earlier part of the proceedings of the Committee also show that the
honourable mover and Chairman of it, actuated, no doubt, by a sense
of public duty, entertained, at first, no very friendly views on the
subject in reference to this Company.

The facts elicited in the course of the inquiry, and the glaring
self-contradictions exhibited by the principal witness, when brought to
the test of an examination before the Committee, as well as the hostile
tone adopted by him towards this Company, appear, however, to have
satisfied the honourable gentleman that, while induced to believe that
he was prosecuting a public object, and undertaking a public duty, he
had been made use of, for the mere gratification of private feeling.

And the following two first paragraphs of the Committee’s Report,
which was drafted and proposed by the honourable member himself, are a
sufficient refutation of the misstatements which led to the inquiry.

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 better terms could have been obtained for the
public.”

As the detached and inconsecutive form in which the evidence of the
different officers of the Government departments was given to the
Committee does not afford a very clear view of the history of the
connexion of this Company with the Contract Packet Service--and, in
particular, does not show the important public advantages which have
been derived from the undertaking of these services by the Company--it
is considered expedient, previously to proceeding with the abstract
of the Committee’s proceedings, to give a brief consecutive statement
of the circumstances under which the various branches of the Contract
Packet Service were undertaken by the Company. And first,


No. I.

THE PENINSULAR MAILS.

Previous to the 4th of September, 1837, the arrangements for the Mail
Packet communication with the Peninsula were as follows:--

Mails to Lisbon were conveyed by sailing Post-office Packets, which
departed from Falmouth for Lisbon every week--wind and weather
permitting. Their departures and arrivals were, however, extremely
irregular; and it was no very infrequent occurrence for the Lisbon Mail
to be three weeks’ old on its arrival at Falmouth, instead of being
brought in five days, with an almost mail-coach or railway precision,
as is now the case.

The communication with Cadiz and Gibraltar was only once a month by a
steam packet.

The originators and original proprietors of the Peninsular Steam
Company, who had, for upwards of a year previously to the time above
mentioned, been running steam vessels at a considerable loss between
London and the principal Peninsular ports, finding themselves in
a position to effect a great improvement in the arrangements for
transmitting the Mails, applied to the Government of that day on the
subject, but were at first coldly received, and their suggestions
disregarded. They continued, however, to prosecute their enterprise;
and the celerity and regularity with which their steam packets made
their passages soon began to attract the attention of the public.
The merchants began to complain loudly of the inefficiency of the
transmission of the Mails by sailing packets; and it was at last
intimated, from an official quarter, to the Managers of the Peninsular
steamers, that if they had any plan or proposals to submit for an
improvement of the Peninsular Mail Service, the Government was then
prepared to receive and consider the same.

In consequence of this intimation, a plan and proposal was drawn up for
a weekly transmission of the Mails between Falmouth and Vigo, Oporto,
Lisbon, Cadiz, and Gibraltar, by efficient steam packets, and at a
cost to the public which should be less than that of the then existing
inferior arrangement--namely, sailing packets to and from the Port of
Lisbon, and a steam packet, once a month only, to and from Cadiz and
Gibraltar.

The plan, after due examination, was considered to embrace advantages
to the public far exceeding what the then existing arrangements
afforded; and its adoption was consequently intimated to the authors
and proposers of it; but, at the same time, they were informed that the
execution of it would be put up to public competition.

Accordingly, an advertisement was soon afterwards issued, inviting
tenders, from owners of steam vessels, for conveying the Mails between
Falmouth and the Peninsula, in conformity with the plan submitted by
the Peninsular Company; and the Contract for the Service was competed
for against that Company by the proprietors of some steam vessels,
who, under the designation of the British and Foreign Steam Navigation
Company, had a short time previously commenced running two small
steamers to the Peninsula, in opposition to the Peninsular Company’s
vessels.

This British and Foreign Company, not being able to satisfy the
Admiralty that they had the means of performing the proposed Service,
their tender was rejected. Upon which they addressed the Admiralty, and
requested that the Contract might be postponed, alleging, that if a
month more were given to them, they could provide sufficient vessels.
Their request was granted; and, contrary to all previous practice,
after the tender of the Peninsular Company had been given in, and the
amount of it, in all probability, known to their competitors, the
Contract was again advertised, and a month more given for receiving
tenders.

The British and Foreign Company again failed to show that they had any
adequate means of performing the Service; and a private negotiation
was then entered into by the Government, with the Peninsular Company,
with a view to reduce the sum required by them. This sum was £30,000
per annum, being about £5,000 less than the estimated annual cost to
the public of the sailing packets and steam packet previously employed
in conveying the Mails. This sum was ultimately reduced to £29,600,[2]
on which terms the Contract was concluded on the 22nd August, 1837,
and may be considered to have formed the basis upon which one of the
most extensive and successful steam enterprises yet known has been
established.

These facts, it is submitted, abundantly show, that so far from any
favour being shown, in regard to this Contract, to the originators of
this Company, they obtained it in the face of adverse circumstances,
and solely because they had, by their own enterprise, placed themselves
in a position to effect an important public improvement, combined with
a reduction of the public expenditure.


No. II.

    _Contract for an accelerated Conveyance of the India and other
    Mails between England and Malta, and Alexandria._

COMMENCED SEPTEMBER 1ST, 1840.

The efficiency with which the Peninsular Mail Packet Service was
performed elicited from the Admiralty repeated testimonials of
approbation; and, proving as it did, that that description of service
could be more advantageously conducted by private enterprise, under
Contract, than by Government vessels and establishments, paved the way
for the subsequent extension of Contract Mail communication which took
place with the West Indies, North America and the East Indies, China,
&c.

Previous to the 1st of September, 1840, the arrangements for
transmitting the India Mails to and from Egypt, to meet the East India
Company’s steamers plying monthly between Bombay and Suez, were as
follows:--

These Malls were forwarded, every fourth Saturday, by the Contract Mail
steamers of the Peninsular Company to Gibraltar, and there transferred
to an Admiralty steam packet, which carried them to Malta. They were
there transferred to another Admiralty packet, which carried them to
Alexandria. The homeward Mails were brought in a similar manner.

As the Peninsular packets had to call at Vigo, Oporto, Lisbon, and
Cadiz, in their passage to and from Gibraltar, and the Government
packets were of inferior power (about 140 horses) and speed, the
transmission of the India Mails by this route was very tardy, occupying
generally from three weeks to a month in their passage between England
and Alexandria.

Imperfect as this mode of transmission was, it probably would have been
continued for an indefinite period, had not some circumstances occurred
to render an alteration of it imperative.

About the middle of the year 1839, the British Government effected a
convention with the French Government, for transmitting letters and
despatches to and from India, &c., overland, through France, _viâ_
Marseilles, from whence a British Admiralty packet conveyed them to
Malta. From thence this portion of the Mail, and the larger and heavier
portion, forwarded by the Peninsular and Admiralty packets, _viâ_
Gibraltar, were carried together to Alexandria by another Admiralty
packet.

The portion of the Mails forwarded through France was despatched from
the Post-office on the 4th of every month, while the main, or heavier
portion, continued to be forwarded from Falmouth, by the Peninsular
packets, every fourth Saturday; this arrangement was found, in the
course of a few months, to work very awkwardly, inasmuch as the portion
of the Mail forwarded, _viâ_ Gibraltar, had become a fortnight or more
in advance of that forwarded _viâ_ Marseilles, and had to wait that
time at Malta for the arrival of the Marseilles packet.

This irregularity, which every succeeding Mail increased, together with
the suspicion that the British despatches, in their transit through
France, were not altogether safe from being tampered with, rendered the
Government very desirous of establishing a more accelerated means of
transmission, _viâ_ Gibraltar, for the main portion of the India Mails
and the public despatches.

The Managers of the Peninsular steamers were applied to, to submit
a plan for this object. They proposed to establish a line of large
and powerful steamers, to run direct from England to Alexandria, and
_vice versa_, touching at Gibraltar and Malta only, and, by such an
arrangement, to transmit the Mails in a time that should not exceed
by more than two to three days that occupied by the overland route
through France; and undertook to execute such service, with vessels
of 450-horse power, for a sum which should not exceed the cost to the
public of the small and inefficient Admiralty packets then employed in
the same service.

The plan was examined and adopted by the Government; but, as in the
case of the Peninsular Contract, the execution of it was put up to
public tender, by advertisement. And, as appears by the evidence of Mr.
T. C. Croker, of the Admiralty (see his answer to question No. 2,033),
no less than four competitors tendered for the Contract, viz.:--

  Willcox and Anderson  for   £35,200 per annum.
  J. P. Robinson         ”     51,000     ”
  Macgregor Laird        ”     44,000     ”
  G. M. Jackson          ”     37,950     ”

The tender of Messrs. Willcox and Anderson who, as Managers of the
Peninsular Company, had furnished the plan, was accepted, _because it
was the lowest_. But Mr. Croker in his evidence (see Report) has made a
slight error in calculation, in stating the sum at £35,200 per annum.
The tender made was as follows:--

  For the 1st year of the service    £37,000
     ”    2nd year       ”            35,000
     ”    3rd year       ”            34,000
     ”    4th year       ”            33,000
     ”    5th year       ”            32,000[3]
                                     -------
                       Divided by 5) 171,000
                                     -------
  Gives for the annual cost          £34,200
                                     =======

Besides this reduced sum, as compared with the demands of the other
competitors, the tender of Willcox and Anderson afforded further
important advantages to the public, in a reduced rate of passage-money
for officers travelling on the public service, conveyance free of
Admiralty packages, &c.

The vessels offered by Willcox and Anderson, were the “Oriental,” of
1,600 tons, and 450-horse power, and the “Great Liverpool,” of 1,540
tons, and 464-horse power, (originally destined for the transatlantic
line of communication, but which were placed at their disposal by the
Managers and Proprietors of that enterprise). They were also bound to
provide a subsidiary vessel, of not less than 250-horse power, besides
a vessel of 140-horse power, for the Malta and Corfu Service. The
estimate made at the Admiralty (see question No. 1411) of the cost of
the Government packets which performed the service, and which were
superseded by this Contract, was £33,912. But as that estimate did
not include any allowance for interest on their first cost, nor for
sea risk, nor for depreciation, the following per centages on these
accounts must be added to it, in order to present a tolerably correct
view of