Finding, from a return which had a short time previously been made by the East India Company to the House of Commons, that the cost of conveying the India Mails between Bombay and Suez, as then performed by that Company, with steam packets of an average power of about 200 horses each, and some of which were of inferior speed, was not less than £110,000 per annum,--the Peninsular and Oriental Steam Company made a proposal to the East India Company, to relieve the latter of that Service, and to undertake it with their vessels of 520-horse power each; and thereby effect a considerable acceleration in the transit of the Mails--an improvement in the accommodation, and a reduction in the charge for passengers--a greater facility for the conveyance of light valuable goods and parcels--and a reduction of about £30,000 in the public expenditure, inasmuch as the Peninsular and Oriental Company offered to do the service for £80,000 per annum. The then Court of Directors of the East India Company being opposed to the relinquishment of the postal service between Bombay and Suez into the hands of private enterprise this proposal was not entertained; and, the matter having engaged the attention of her Majesty’s Government, it was ultimately arranged that the East India Company should be allowed to retain the Packet Service between Bombay and Suez, and that the Peninsular and Oriental Company should submit proposals for the establishment (under Contract with the Admiralty) of a Monthly Mail Service between Suez, _viâ_ Ceylon, and Madras and Calcutta, with vessels of 500 horse-power; and, in connection therewith, a monthly communication between Ceylon, Penang, Singapore, and Hong Kong, with vessels of 400 horse-power, thus effecting a Mail communication twice a month with India, and a Monthly Steam Packet communication with China. After a lengthened negotiation a Contract was effected, in virtue of which the Peninsular and Oriental Company were to receive £115,000 per annum, equal to about 20s. per mile, for the Suez, Ceylon, Madras, and Calcutta Service; and £45,000 per annum, equal to about 12s. per mile, for the Ceylon, Penang, Singapore, and China Service. This Contract was not put up to public competition, and there are obvious reasons to show why to have done so would have been useless, and unjust. It would have been useless, because it was well known that there were then no vessels in existence capable of performing such an extensive service, on the plan proposed, except the vessels which had, in fulfilment of the conditions of their Charter of Incorporation, been provided by this Company expressly for the East India Steam Communication; and it would have been unjust to the Peninsular and Oriental Company, after they had been induced to embark so large an amount of capital in providing ships of a description adapted to important national objects, not to have given them the opportunity of executing the Service on reasonable terms.