50

(Encloiure)

3rd. The converging of the extra communication thus proposed to be given at a point (Ceylon) whence radiate lines of Telegraphs to all the principal places in India, and which will in every probability be in a short time extended to the United Kingdom enhances much, both their Political and Social importance. It now remains for the Directors to deal with the financial interests of their Shareholders in reference to this proposed arrangement. It will bo obvious to your Lordships that unless such an augmentation of the earnings of the Steamers performing the Australian Service can be obtained under the new arrangement as would not only cover the expense of £55,000, which would be incurred by the separate Seivice for Mauritius, but also the present deficiency estimated from ascertained results at £30,000 per annum, the Service could not be crrried on, —such an amount exceeds very far what the Directors conld prudently calculate upon. They are however prepared to take the chance on behalt of the Company of obtaining to the extent of £00,000 additional traffic by the branch lines which deducted from the present deficiency on the Australian line and the cost of maintaining a separate line for Mauritius together making £85,000, will still have £25,000 to be added to the present subsidy, which the Directors submit will form a very moderate consideration for the various public and national advantages herein pointed out. The suggested change of the route can be effected without any irregularity in or interruption of the Mail Service between this Country and Australia, and will not involve any alteration in the existing Time Table beyond the substitution of Point de Galle for Mauritius, the dates of arrivals at and departures from each Port remaining the same as at present. I am only further instructed by the Directors to state respectfully that an early consideration and decision of the question will be of essential importance to the interests of the Company. I have, &c, (Signed) Jas. Allax, For the Secretary. The Lords Commissioners of Her Majesty's Treasury, Whitehall. MR. LUNG TO TUB PENINSULAR AND ORIENTAL COMPANY. Treasury Chambers, 9th November, 1859. Gentlkmf.v, — I have laid before the Lords Commissioners of Her Majesty's Treasury your Secretary's Letter of the 4th instant on the subject of your Contract for the conveyance of the Australian Mails, and I am directed to state that their Lordships have no objection to the substitution of the Ceylon route for that of Mauritius as proposed by you as soon as the necessary arrangements can be made; as they are dii - posed to think that the former route will be on the whole more satisfactory to the Colonies, and more for the interest of the public as well as of your Company. As regards the question however of an increase of the present subsidy £25,000 a year, it would be impossible for Mγ Lords to agree to any increase for reasons, among which it may be sufiicteut for the present to state that no increase could be sanctioned without consulting the Colonies, who contribute a large proportion of the cost, nor could My Lords entertain any question of altering the present financial conditions of the Contract without waiting for the Report of the Committee of the House of Common* on Mail Contracts. If therefore the Company wish to obtain the immediate sanction of the Government to the proposed change of route, you must be prepared to waive any question of increasing the amount of subsidy. and confine your application simply to a change of route. My Lords would not object to sanction such an application, leaving to the Company the right of taking at aiiy time any steps for terminating the Contract by payment of the penalty of £'25,000 which would have been o[>en to them under the original Contract, and further providing that after two years experience of the Ceylon route-, either party may terminate (he Contract without penalty on giving 12 mouths' notice. In the event of the Company adopting this course, the Contract will have to be modified so as to establish Ceylon for the Mauritius, and a separate Contract made for the Mauritius. These Contracts will be immediately prepared and signed, and in the meantime they may be acted upon as if signed. It is assumed, however, that the proposed change will not be carried out until the Company are in a position to give Mauritius the full benefit of an independent Service—as originally contemplated, and that in all other respects the Time Table. wiH remain unaltered. Also that the Australian Mail Service shall be considered as the Main Service, and that any arrangements which may be made for combining other Services with it at Galle, Aden, or Suez, shall be of such a nature a&not 4» interfere with that which is the main object of the Contract, viz , the attainment of the greatest possible regularity in the transmission of the Australian Mails in a period not exceeding 55 days between Southampton and Sydney, 1 have. &c, (signed) S. 1 a:xc;. To the Directors of the Peninsular and Oriental Company, 122, Leadenhall Street.