Henry C Smith to H. A . Peirce, United States, January 16, 1871

No. 1.—Unofficial.

Mr. Minister: The establishing of a proper steam service between San Francisco and Sydney is a matter of so much importance that I gladly give you such information as may be in my power to communicate.

It is assumed by steamer-owners and those interested that to run steamers on the route large subsidies will be required, and that the countries whose ports are connected or visited by the boats should join their subsidies on the same line.

The Eastern Australian and New Zealand colonies, whose interests in this Pacific route are identical, as compared with the route occupied by the Peninsular and Oriental Company, have so far joined together as to subsidize the line of English steamers at present running from Sidney, via Auckland, to Honolulu, and connecting here with the American line of Messrs. Holladay & Brenham. Their subsidies (New South Wales £10,000 and New Zealand £15,000) are granted for five years to H. H. Hall, esq., (United States consul at Sydney,) for a monthly service. His steamers commenced running in April last, and have made their trips regularly up to this time, transferring their passengers and mails at this port to the San Francisco steamer.

The steamers employed are the Wonga-Wonga and City of Melbourne; both are iron screw propellers, 700 tons English measurement, able to steam on the round voyage ten knots per hour, and of accommodating one hundred first-class and one hundred steerage passengers. The two first trips of these steamers, their passengers having been about one hundred and fifty persons, paid a very handsome profit on the cost of the voyage, but at present the passengers having fallen to fifty or sixty persons; they are not paying their way.

Mr. Hall is now hacked by the Australian Steam Navigation Company, whose boats he chartered for the first six months, but they now (as they have idle boats) are desirous of joining him to maintain the service. They propose, if New Zealand breaks off from the present contract, to secure sufficient Subsidies from the Australian colonies to keep their steamers upon the route. These steamers on their voyage from Honolulu to Auckland follow the shortest line, but in returning keep well eastward of the Friendly Islands, in order to avail themselves of the southeast and northeast trade-winds on the northerly passage, sighting always Fanning’s Island.

Mr. Hall has a contract with Messrs. Holladay & Brenham to transport his mails, passengers, &c., between San Francisco and Honolulu. The distances are as follows:

Their contract time is:

The route followed by Hall’s steamers fully accommodates the New Zealand colonies, and for their connection with San Francisco cannot be bettered; but not so the Australian colonies, inasmuch as the direct line between Honolulu (which lies in the shortest line between San Francisco and Sydney) and Sydney is seven hundred and sixty-six miles, or three days’ steaming, shorter than through Auckland.

In order to obtain for both colonies, therefore, the shortest time, the line must branch at or near the Feejee Islands.

But though the colonies combined upon subsidizing the Hall line as the most immediate realization of their wishes to have steam connection with San Francisco, yet the necessity of a subsidy from Congress to help them develop the route with first-class steamers, and the ambition of New Zealanders to have their islands the terminus of the main line, has prevented a mutual agreement with the same company to run their ships.

New Zealand has recently entered into an agreement with Mr. Neilson, an agent of Messrs. Holladay & Brenham, to pay £40,000 per annum for a first-class line of steamers which shall make Port Chalmers, the most southern of their ports, the terminal point of their voyages. It enforces the vessels, after reaching Auckland, the most northern port, to make a coasting voyage of one hundred hours, touching at Wellington and Lyttelton, to Port Chalmers.

The largest commercial city of the islands, and the nearest port to Sydney, is Auckland.

This agreement has been entered into by Mr. Vogle, their postmaster general, under the general provisions of their postal laws of 1858, and it must be submitted to their parliament, now in session, for approval and adoption. The expectation of its adoption is based upon the compromises of the contract regarding the wants and interests of the parliamentary district, by making the steamers touch at the several ports on the coast.

Though this agreement, in its first promulgation, has been cheered by their press, it seems impossible that it will be accepted for its full term of years, since it throws upon their revenue a burden unnecessarily large, to secure a benefit that can be obtained at a cheaper price; because of their large public debt and small population of 250,000. Their parliament will remember that they already have a steam service which gives them in the main the benefits claimed to arise out of the new scheme, and that the proposals for the same service have been made by a strong London company at £24,000 per annum.

Their scheme also will not meet with any favor or co-operation from the Australians, although the contract mentions branch lines from New Zealand ports as one of the contingencies of the agreement. Their population of two and a half millions and large trade with San Francisco cannot be made subordinate to the strait-jacket of a terminal line to New Zealand.

The projected route of the steamers (at choice of the contractors) from San Francisco to Auckland, via Tahiti, will also in greater degree be incompatible with the interest and wishes of the Australians; for although the distance between the two ports, via Tahiti or via Honolulu, is upon the chart about the same, the up voyage from Auckland through Tahiti would be lengthened several days by reason of steaming the whole passage directly in the teeth of the trade-winds. As the direct route between San Francisco and Sydney lies near the Hawaiian and the Feejeean Islands, and not at all near the Society Islands, a detour to these latter islands would not help matters in their estimation.

or 720 miles in favor of the Honolulu and Feejee route. It is not necessary with large steamers, except for the purpose of connecting with a branch line to Auckland, to stop at Feejee as well as at Honolulu on a voyage to Sydney.

The commercial interests of the United States combine primarily with those of Australia, inasmuch as by its greater population and trade over New Zealand it will give the largest result, by reason of steam connection with San Francisco.

Nearly all the passengers and freight that go upon the steamers at present running is either to or from Australia.

That the steamers ought to be run upon the routes indicated by the speediest and most natural track of traffic and travel, and thereby trade be fostered, rather than be forced into impracticable channels, is a proposition to be taken into reasonable consideration by the governments whose subsidies will be given to this new Pacific enterprise. In the disagreements of the colonists, and their impending failure to combine upon one and the same route, it will be within the province of Congress to secure the co-operation of both, as well as that of the Hawaiians, by designating in their subsidy grants (if they mean to secure the route to their own ships) the route which shall be followed.

Taking for granted that Sydney will be made the terminus, for the reason that these steamers ought to become self-supporting, or nearly so, the best route is that of San Francisco to Sydney, via Honolulu and Auckland, or via Honolulu and Feejee, with a branch line to Auckland.

If either of these routes obtains assistance from Congress, the commercial interests as well as mail convenience of all the countries mentioned will cause the subsidies to be combined eventually upon it.

Beyond the fact that Honolulu is upon the most direct line, there is another reason why Congress should cause it to be named as a way port when this subject comes up for their consideration. They have caused for several years past a subsidy of $75,000 to be paid for a steam service between San Francisco and Honolulu, and the policy which instituted that subsidy is still both sound and reasonable in favor of its continuance. They have already possession of one-third of the distance contemplated by the new service, which in fact is but an extension, and this extension was provided for, as possible, in the contract made with Messrs. Holladay & Brenham.

Now that the question arises to cause it to be done, it would seem unwise to abandon the original purpose of making Honolulu a connecting port, and unnecessary to pay for double service across the same part of the ocean.

On the other hand, it can hardly be made to appear that to abandon Honolulu in favor of Tahiti or the Feejees, it is a reasonable way of promoting the welfare of either American steamships or American commerce. The Tahitian Islands number but 8,000 souls all told, of whom about 600 are white or mixed blood, and their exports to California are bounded by a few thousand oranges yearly. The same is true of the Feejeean groups in regard to white population, while they have nothing to offer in the way of trade.

To make either of these groups the only way station for the steamers will, in effect, be to cause their permanent occupation of the route to depend upon the largeness of the subsidies, and the ability of the governments granting them to continue granting them always.

This government, Mr. Minister, as you are aware, are authorized by the legislative assembly to contribute a small subsidy to any line that can assure us a permanent connection with San Francisco and Australia, and although the colonies would prefer these islands as a way station, neither their preferences nor our subsidy will avail to make it so, if congressional subsidies to an American steamship line is adverse or hostile to such an arrangement.

I have the honor to be, yours truly,