The Indian Ocean - Michael Pearson [158]
Very large sums were involved. Between 1840 and 1867 the contracts yielded £4.5 million, and £6 million between 1868 and 1890. Overall the support given by the British government was about 25 per cent of the total capital. For the P&O line in the period 1840–80 the subsidy made up 29 per cent of operating costs, and 28.5 per cent of total receipts. These were then reduced, so between 1880 and 1914 the respective proportions were 18.8 per cent and 15.7 per cent. Even later, in the early twentieth century when subsidies had been reduced, P&O still got a grant for the India, China and Australia mails of £330,000. The P&O line also did well out of carrying bullion: in a good year over £200,000.42 Another lucrative low-volume, high-value cargo up to 1870 was opium, which had to be carried secretly to avoid complaints from moralists. Subsidies to P&O continued long after other British lines had been left to stand on their own and face competition. This was because it served the heartland of the empire, the fulcrum of the Indian Ocean, India, and so for prestige reasons had to be helped well into the twentieth century.
P&O was joined in the commanding heights of long-distance prestige routes across the Indian Ocean by the French competitor Messageries Imperiales, which also operated on more local routes, as also did the Dutch entrant, KPM (Koninklijke Paketvaart Maatschappij). These rivals had to face competition on the high seas from P&O, and on local routes from the very successful British India Steam Navigation Company (BI), which essentially operated branch lines and smaller local routes feeding into P&O. Its steamers plied between islands, and up and down rivers, as well as on the coasts of the high seas. It was controlled by Scottish interests led by William Mackinnon.
BI was therefore an Indian variant of the predominant pattern of steamshipping enterprise in the Indian Ocean during the 1850s and 1860s, in which guaranteed income from the carriage of mails and the regularity of scheduled services demanded by postal contracts supplied the financial and operational underpinnings of the liner trades.
The close government–commercial nexus was well seen in the way that when BI first started sailing from Mumbai to Basra in the late 1860s, their agent in Basra was also the official British government representative there. Their steamers were routinely used by the Indian government to transport troops; nine were used to take troops to Abyssinian in 1867–68. Like P&O, its subsidies from government were what kept it going. Between 1864 and 1870 the firm was, if one subtracts the mail subsidies, profitable in only one year.43
In the Gulf British interests had been dominant since the defeat of the Qawasim 'pirates' in 1819. When a mail subsidy for this area was opened for tenders in 1862, two Indian-owned firms were unsuccessful: BI won, at least in part as it was British, and so could be better relied on to serve wider imperial interests. BI steamers connected Mumbai with Muscat, Bandar Abbas, Bushire, Bahrain later, and Basra. There was even a Basra Club, for British expatriates. Here BI ships linked with those of another British owned concern, the Euphrates and Tigris Steam Navigation Company, which went upriver from Basra to Baghdad.44
Other Europeans were forced to operate in the interstices of the British system. KPM, founded in 1888, was explicitly designed to challenge British dominance It did very well in Indonesia, even to the extent of ousting Singapore as the main hub for local, but not long-distance, trade. This also was very much a Tool of Empire. It helped extend Dutch authority over the remote islands of Indonesia, transported troops, and in return was heavily subsidised by the Dutch government. Its lines extended to China and Japan, to Bengal, Australia and Thailand.
BI was always closely tied to government, and indeed it has been claimed that Mackinnon, its driving force until his death in 1893, was as important in the expansion