Third: The question then arises whether, in the continued employment of the Peninsular and Oriental Steam Company’s vessels, considering the actual condition and the established profits and credit of the company, owing in some measure to the existing contract, some modification of the terms, for the advantage of the public, may not be fairly expected. With a view to the consideration of this question, the following facts are submitted. The general transactions of the last half-year, the best period for judging clearly the present operation of the company, furnish the following points: The gross profits, after deducting 2½ per cent. for £ _s._ _d._ management, and 5 per cent. for repairs, and 2½ per cent. for insurance, amount to 62,629 11 2 From which is deducted 2½ per cent, for depreciation 16,915 0 0 -------------- Leaving, beyond the amount deducted for directors £45,714 11 2 -------------- The dividend to the shareholders, at the rate of 4 per cent. for six months, or 8 per cent. per annum, on the original capital of £973,378, amounted to £38,933, leaving a surplus balance of about £6,781, to be carried to the next account. If even the amount paid to the directors from the 2½ per cent. (deducted for charges of management, being for a half year, £8,248 10s. 9d.), were added to the surplus balance of £6,781, and a dividend paid to the proprietors at the rate of 10 per cent., the scale suggested by their lordships, a residue would only be left of about £5,296; from which residue the expenses of management, and ordinary salaries for managing directors, would have to be defrayed. Their lordships will thus have before them the means of considering what modification of the terms of the contract the present and prospective state of the profits of the company would appear to justify; or whether it would be expedient to adopt such modification to the varying profits of the company in the terms proposed by it; viz., that when the financial position of the company, with respect to such mail services, shall be such as, after making the customary allowances for the repairs, &c., a maximum dividend of 10 per cent. can be realised to the shareholders, any surplus over and above such maximum dividend shall be placed to the credit of the Government. (Signed) A. ELLICE, WM. H. BOND. APPENDIX. _No. 1.--Memorandum of Contracts with Government for the Conveyance of Her Majesty’s Mails by the Peninsular and Oriental Steam Navigation Company._