ime contracts were made with the North German Lloyd and the
Hamburg-American lines for a weekly service for the sea-postage.

The Cunard and Inman grants were sharply criticised, and a Parliamentary
committee was appointed to investigate them. The committee's report
sustained the critics. It observed that "the payments to be made when
compared with those made by the American Post Office for the homeward
mails are widely different, inasmuch as the American Post Office has
hitherto paid only for actual services rendered at about half the rate
of the British Post Office when paying by the quantity of letters
carried." The committee recommended that these contracts be disapproved,
and that the system of fixed subsidies be abolished. "Under all
circumstances," they concluded, "we are of the opinion that, considering
the already large and continually increasing means of communication with
the United States, there is no longer any necessity for fixed subsidies
for a term of years in the case of this service."[AS] This
recommendation, however, was not accepted, and the contracts were duly
ratified.

The report of this Parliamentary committee is significant in the
evidence it indirectly affords, confirming the declaration of
1853,[AT]--that the postal subsidies were not as assumed, payments
solely for services rendered, but in fact were concealed bounties.

In 1871-72, when a renewed effort was made to establish an American
line of American-built ships,[AU] the British subsidies were again
increased. Then, also, was instituted by the Admiralty the naval
subvention system--the payment of annual retainers to certain classes of
merchant steamers, the largest and swiftest, in readiness for quick
conversion into auxiliary naval ships in case of war, and to preclude
their becoming available for the service of any power inimical to
British interests.

At the expiration of the Cunard and Inman seven years' contracts the
postmaster-general applied the principle of payment according to weight
throughout for the carriage of the North American mails. But preference
was given to British ships, these receiving higher rates per pound than
the foreign. In 1887 an arrangement was entered into by which the Cunard
and Oceanic lines were to carry all mails except specially directed
letters, and the pay was reduced.[AV] This method of payment continued
till 1903.

Then another sharp change was made in the subsidy system to meet
another, and mo