The insurance is at a rate of 5 per cent. on the first cost of the vessels employed, after deducting the amount already carried to depreciation account; out of which amount the premiums for insurance at Lloyd’s are paid on such assurances as are effected there, the balance being added to the insurance fund. The portion of the insurance actually effected is at rather a higher rate than the 5 per cent. It would not be fair, therefore, to include any portion of this reserved fund in an estimate of the company’s profits as shipowners or mail contractors. It belongs fairly to them in their character of insurers, as, if they had insured the full value of their property, it would have been paid to underwriters. The depreciation fund is calculated at a rate of 5 per cent. per annum on the first cost of the vessels, after deducting the amount previously carried to the same account. The repair fund is at the rate of 10 per cent. per annum, calculated on the same amount as the preceding; and it will be seen that the sum thus reserved for the last six months was £37,633 13_s._ 3_d._, which did not provide for the actual expenditure of £39,630 6_s._ 3_d._ So far, therefore, as the affairs of the company have hitherto proceeded, the amount paid to them under the contract would not appear to have exceeded a reasonable remuneration for the services performed, on the principles before stated. Second: The comparative advantages which might result from the employment of her Majesty’s vessels, instead of contract vessels, for the performance of those duties, appears to be a question of somewhat difficult solution. The present mode of keeping the accounts of the navy, and the commixture of expenditure for the steam and other departments in the dockyards and public offices, must render it exceedingly difficult to ascertain the cost of any separate branch of service. Supposing, however, that the financial comparison could be made, yet there are many other important elements in the consideration of the subject. For the rapid and secure performance of the public mail duty, no branch of the mercantile marine is so well prepared as her Majesty’s naval department. But by the employment of her Majesty’s vessels, light merchandise could not be conveyed; the habits and comforts of the passengers could never be so well provided for as by persons paid for such duties; and as regards the troublesome details of carrying passengers, freight, and merchandise, the war steamer must be less adapted than the merchant vessel. It must be recollected, also, that a sufficient number of vessels must be fitted up, equipped, provisioned, stored, and specially and exclusively adapted to and employed upon this service; and that fresh arrangements, depôts, and agencies along the lines of route would be required; the preparation for such services would therefore be necessarily attended with an expense which years of any probable saving could scarcely defray.