lines between "New York and Aspinwall direct," and between "New York and New Orleans, via Havana," will both be continued as heretofore, the only change being to substitute a direct semi-monthly line between Havana and Aspinwall for the present line between New Orleans and Aspinwall direct.

I regret deeply that your company contemplates making any change whatever in the present arrangement, and especially that the direct semi-monthly line between New Orleans and Aspinwall is to be abandoned. I am, very respectfully, your obedient servant,

MARSHALL O. ROBERTS, Esq.,

JAMES CAMPBELL.

President of U. S. Mail Steamship Cnmpany, New York.

UNITED STATES MAIL STEAMSHIP COMPANY,

New York, September 7, 1854.

SIR: I have the honor to acknowledge the receipt of your letter of the 4th instant, recognizing and approving the schedule of running the ships of this company between New York, Havana, and New Orleans, and between Havana and Aspinwall, as advised in my letter of the 8th ultimo. The change, as you suppose, consists solely in the substitution of the line between Havana and Aspinwall for the direct line between New Orleans and Aspinwall; being a return to the original schedule in precise accordance with the terms and conditions of the existing contract.

I cannot but participate in your regrets that the company have felt compellel to withdraw the direct line between New Orleans and Aspinwall. That line was established, and the large additional service beyond the requirements of the contract with the government undertaken from a desire to afford all the facilities in our power to the western and southwestern States, not only for a direct intercourse with California, but for the transmission of the mails to and from that section of the Union.

The experiment has been fairly made during a period of more than two years, and has resulted in a monthly loss to the company, and will eventuate in a very large aggregate loss, unless Congress shall direct that a reasonable compensation be paid for the extra mail service which, under the circumstances, we have not hesitated to perform, and which we regret to withhold, but which we do not feel justified in continuing at a large pecuniary sacrifice to the company.

By a computation made from the company's books, the losses incurred by running the direct line between New Orleans and Aspinwall, during the single year ending the 30th of June last, amount to an aggregate of more than one hundred and five thousand dollars, exclusive of insurance and wear and tear. If these last two items be added to the actual running losses, the aggregate would reach nearly two hundred thousand dollars.

The department will readily perceive that the very great sacrifice of money necessary to keep up that line has rendered its withdrawal

almost, if not quite, an imperative necessity. Nevertheless, if the department desires its continuance, I think that perhaps an arrangement may be effected with the Nicaragua Transit Company, by which half the service might be performed by one of their steamers and the other half continue to be performed by one of. this company's ships, and the losses be thus divided. At any rate, if the suggestion meets the approval of the department, I will, at your request, endeavor to make such an arrangement.

I have the pleasure to inform the department that this company have just completed the purchase of the splendid steamship "North Star," of Commodore Vanderbilt, at a cost of $400,000, and that she will sail to Aspinwall with the California mails on the 20th instant. I am, sir, very respectfully, your most obedient servant, M. O. ROBERTS, President.

Hon. JAMES CAMPBELL,

Postmaster General, Washington.

It will thus be seen that the successor of Mr. Hall (Mr. Campbell) had his attention fully directed to this subject of the arrangement considered by the memorialists to be existing, and that he recognized and adhered to it. He regretted the discontinuance of the New Orleans part of the arrangement; that he expressly referred to the continuance of the direct line between New York and Aspinwall, and that he had been distinctly pointed in Mr. Roberts' letter to that of Mr. Croswell's of 23d June, 1852, in which the expectation of compensation by Congress was declared, yet he "continued the arrangement.'

In this connexion it may be proper to remark that the refusal of Mr. Campbell to admit a right to any compensation by the memorialists relates to a different service from that claimed, although it has been confounded with this. The correspondence of Mr. Campbell related to the carrying of mails on intermediate steamers making a weekly line. His position being against any allowance, (and properly, as it would have been more frequent service than Congress had authorized,) no claim has been presented for it. But that he did not apply that position to the case of the service now under consideration, is shown by the fact that he continued to send the mails by the direct steamers after the above recited correspondence had distinctly drawn his attention to the nature of the arrangement, and the expectation of additional compensation, and also after all possible doubt upon this point had been removed by the actual claim of compensation presented to Congress.

It is also worthy of remark that the loss stated by the memorialists in the New Orleans part of the service, for a single year, amounted to two hundred thousand dollars.

If the memorialists are entitled to some compensation, then how much should it be?

The length of the route established by contract was 2,810 miles, and the compensation at the rate of $2.15 per mile.

The additional service added 2,422 miles to the length of route

while the New Orleans direct line was run, and 1,981 (via Jamaica, 2,005) miles, when that was discontinued.

In considering what would be a just and reasonable compensation for the service, we may properly inquire if the compensation which the government bestows for the regular contract service is so liberal as to indemnify the contractors for the outlay and hazard of the business, and yield a due profit and reward for their enterprise.

It appears by the statement furnished to the committee, at their request, and which is annexed, (see Appendix, marked A,) that the original cost of the vessels employed in the contract and direct service has been $3,095,000; that three vessels, of the value of $625,000, have been lost; that four vessels, of the value of $1,195,000, have been sold at a loss, by deterioration, of $976,000; and that the estimate of the present value of the remaining vessels is $750,000—thus exhibiting a loss of investment to the large amount of $2,126,000.

Only two dividends, of ten per cent. each, are stated to have been distributed. These dividends, amounting to $400,000, added to the present value of the vessels, show a total of $1,150,000 to be deducted from an original cost of $3,095,000; making an actual loss of $1,945,000, besides the interest upon the capital invested. Thus it seems that the large receipts for mail pay and passenger fare have been absorbed to so great an extent by the hazards of the service and the deterioration of steamers, that the property remaining at the end of the contract will return but a small part of the original investment, and leave no recompense for the use of the capital.

Relying upon the general correctness of this statement, (although it is not furnished as a precise exhibit, but only a hasty approximation,) it does not seem that the profits of the enterprise have been such as to render unimportant to the memorialists a just recompense for the additional service.

The measure of compensation may be either a reasonable proportion of the contract rate of pay for the additional miles of service, or a payment for the mails as express freight.

The weight of the mails is ascertained to have averaged 672,500 pounds per annum each way, and at the rate charged by the express companies would amount to an average of $96,858 per annum.

At the pro rata contract pay, the additional compensation would be $204 439 20 per annum.

The Committee on Post Offices and Post Roads, at a former session, reported a bill, through its chairman, Mr. Rusk, allowing one-half the pro rata compensation, which would amount to $104,219 60 per

annum.

If one-fourth of the pro rata contract pay is allowed, it will amount to $51,109 30 per annum.

Tables exhibiting these calculations in detail are annexed.-(See Appendix, marked B.)

The committee report the bill accompanying this report, leaving the rate of compensation open for the judgment of the Senate.

Before closing, the committee deem it proper to remark upon one or two points suggested by the papers referred to them.

Does the fact that the steamers by which the additional service was Rep. No. 326-2

performed were put upon the line as a commercial enterprise, and not strictly for mail uses, render improper an allowance?

The committee think not; for the motive which induced the establishment of the lines does not render less valuable to the public the service rendered, nor less entitle them to the reward due to the appropriation of their space on shipboard, and of their capital invested in the line, to the use of the government in transporting the mail matter. This view is distinctly recognized by Congress in the following provision of the original contract:

"And it is further agreed by and between the parties aforesaid, that, on tender of proper compensation by the said government of the United States, not exceeding a due proportion of the pay herein stipulated, the said A. G. Sloo, contractor, shall convey any mail or mails of the United States which he may be required to convey on any steamship which he, the said Sloo, may own, run, or control on the routes aforesaid, beyond the number of trips herein specified."-(See copy of contract, in Appendix No. 1.)

This provision evidently contemplated that the contractors might add to their line other vessels for commercial objects, and contemplated the payment of a just compensation for transporting such mails as it might suit the government to convey in them.

Was the department right in continuing the regular contract service, notwithstanding the arrangement for direct service?

The committee think its continuance was proper and necessary. It furnished to the southern Atlantic and Gulf cities the means of communication directly with California. The Isabel conveyed the California mails from Charleston and Savannah to Havana, where it net the line for Aspinwall; so also, from New Orleans, except when the better service direct from New Orleans was substituted.

Does the delay in applying to Congress affect the case?

The department having communicated the fact of the arrangement to Congress, and having afterwards continued the service, with a knowledge that compensation was expected, and without requiring them to make their application to Congress, and having still continued the service after the application was known to have been made to Congress, the parties cannot be considered to have lost any right originally held. If the department considered it the duty of the memorialists to apply to Congress within any given time, it should either have called upon them to apply, or have withdrawn the mails until they did so. They had a clear option to choose their own time, so long as the department failed to complain and continued to use the benefit of the arrangement.

APPENDIX.

No. 1.

The Sloo Contract.

This agreement, made at the city of Washington, in the District of Columbia, this twentieth day of April, anno Domini eighteen hundred and forty-seven, between the United States of America, by the Secretary of the Navy thereof, and Albert G. Sloo, of the city of Cincinnati, in the State of Ohio, witnesseth: That whereas, by the 4th section of an act of Congress approved March 3d, 1847, entitled "An act providing for the building and equipment of four naval steamships," it is made the duty of the said Secretary of the Navy, upon certain terms and conditions in said act enumerated, to contract, on the part of the government of the United States, with the said A. G. Sloo for the transportation of the United States mail from New York to New Orleans twice a month, and back, touching at Charleston, (if practicable,) Savannah, and Havana, and from Havana to Chagres, and back, twice a month. Now, therefore, the said A. G. Sloo does hereby agree with the United States aforesaid, and firmly binds himself to establish a line of steamships, to consist of at least five vessels, for the transportation of the United States mail from New York to New Orleans, twice a month, and back, touching at Charleston, (if practicable,) Savannah, and Havana, and from Havana to Chagres, and back, twice a month, according to the terms and meaning of said act of Congress. The said steamships to be of not less than fifteen hundred tons burden, and propelled by engines of not less than one thousand horse-power each, to be constructed under the superintendence and direction of a naval constructor, in the employ of the Navy Department, and to be so constructed as to render them convertible, at the least possible expense, into war steamers of the first class: provided, however, that the Secretary of the Navy may, at his discretion, permit one of said steamships to be constructed of not less than six hundred tons burden, and engines in proportion.

And it is agreed by and between the parties aforesaid, that two of the said steamships shall be completed, and ready for service on or before the first day of October, A. D. 1848, shall be of the burden (1,500 tons) above described, and shall be propelled by engines of direct action, similar to the engine of the late United States steamer Missouri; and each of said ships shall be contructed of approved materials and fastenings, upon the dimensions of the late steamship Missouri, as they are known and on record in the Navy Department of the United States, reserving to said contractor the right to add a saloon deck in said steamers, to add to their length not exceeding thirty feet, and breadth of beam not exceeding five feet, as may be necessary to give them the draught of water required by law for the service intended, and reserving to the contractor, also, the right to add two feet to the length of cylinder above provided for, so as to make the same 70 inches in diameter and 12 feet stroke; but, in making any or