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APPENDIX C. No. I.—Ocean Mail Service. ITavino been instructed by Honorable Ministers assembled in Conference to report generally upon tlie tenders now before them, submitted by the British Post Office, for the Federal Mail Service, and also as to the possibilities of providing an alternate service in the event of it being considered undesirable to agree to the acceptance of the P. and O. Company's tender, we have the honor, respectfully, to report as follows: — I. PiiESENT SeETICE. The present contracts pi-ovide a weekly service by the Peninsular and Oriental Steam Navigation Company and the Orient Company, each on alternate weeks. The subsidy to each company is £85,000 per annum, or £170,000 in all, of which the British Post Office pays £95,000, and the Australian Colonies, £75,000. The former collects and retains the sea transit charges at Postal Union rates, viz. : — On letters, 15 francs per kilogramme (ss. Gd. per lb.). On other articles, 1 franc per kilogramme (4J-d. per lb.). on correspondence forwarded to the Colonies by other countries making use of the service. The Colonies, in like manner, collect and retain the charges for sea conveyance on the homeward correspondence of New Zealand and other places not parties to the Federal Service. New Zealand is charged — On letters, 12s. per lb. On packets, Is. per lb. On newspapers, Gd. per lb. 12s. per lb. on letters is equivalent to nearly 3d. (29) per single-rate letter. The subsidy paid by the contracting Colonies (£75,000) is apportioned on the basis of population In addition to the Australian service, the Peninsular and Oriental Company have the contracts for the India and China mails, weekly to Bombay and fortnightly to China, for which they are paid £205,000 per annum. Under existing arrangements Ihe Indian mails every alternate week are carried by the Australian steamers between Brindi&i and Aden, where they are transhipped to or from the Bombay boat. The China and Singapore mails are also carried in the Australian (Peninsular and Oriental) steamers to and from Colombo and .Italy. Contract time between — Briudisi and Adelaide (P. and O. steamers) ... ... ... 780 hours. Naples and Adelaide (Orient steamers) ... ... ... ... 780 „ The original time allowed to the Orient Company was 70S hours, but on the extension of the contract, or from May, 1895 (since which the steamers have called at Colombo both ways), the time was extended to 780 hours. 11. Tenders fob New Service. The only tenderers are the Peninsular and Oriental Steam Navigation Company and the Orient Company, the present contractors. The former provide, as at present, for the India, China, and Australian service, viz., weekly mail to Bombay, and fortnightly to both Australia and China (Shanghai). They submit alternative tenders for mails via Marseilles and Brindisi. The Orient Company's tender provides, as now, for a through service between Naples and Australia (Adelaide), calling at Colombo both ways. Both tenders are for a seven years' contract. The following is a summary of the tenders : — Peninsular and Oriental Tender No. 1, £310,000. From Marseilles. From London. hour* hours Marseilles to Bombay (weekly) 342 370 Marseilles to Shanghai (fortnightly) 782 810 Marseilles to Adelaide (fortnightly) 732 7GO Peninsular and Oriental Tender No. 2, £330,000. From Brindisi. From London, hours hours Brindisi to Bombay (weekly) 302 352 Brindisi to Shanghai (fortnightly) 730 780 Brindisi to Adelaide (fortnightly) GBG 730 Present Cost of P. and O. Services. India and China £205,000 Australia 85,000 £350,000 Carriage of parcels to and from Thames ... ... ... 3,550 £353,550 Saving in cost of present contracts via BrinJisi ... ... £23,550 Saving in cost via Marseilles ... ... ... ... ... 43,550 and Italian transit charges (say) ... ... ... 30,000 Total saving on present cost via Marseilles... ... £73,550 Present