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The Suez Crisis

'The Directors are fully aware that they cannot be held responsible for the change which the Suez Canal made in the prosperity of the Company...involving a reduction in revenue approaching half-a-million sterling and they feel they have done their utmost to alleviate the effects of this disastrous revolution.' Directors' Report, 1876

What compounded the ‘disastrous revolution’ was the reluctance of the British Government, and therefore the Post Office, to use the Canal. As the heavily subsidised Italian, Austrian and French mail steamers sauntered through, P&O could only watch, wait and lobby for a change to the existing mail contract. When it finally came, in 1874 there were new conditions to be met. Penalties for late departures quadrupled, rewards for early arrivals were removed and as the Canal route was predicted to save a day, the annual subsidy was cut by £20,000.

Nevertheless the Company was at last on the Canal and the first ship to pass through on the amended contract was Khiva, one of two brand new liners in the fleet. These were purchased, in 1874, almost complete, having been commissioned by another line and intended for a mail service to South America.

The Suez crisis forced P&O, and its fleet, to change, rationalise and adapt to a more commercial world. It also prepared the Company for a future built on firmer foundations…