THE SAN FRANCISCO MAIL SERVICE.

New Zealand Times, Volume XXXII, Issue 4965, 20 February 1877, Page 2

THE SAN FRANCISCO MAIL SERVICE.

Since the prorogation of Parliament a great deal of correspondence has been going on between the respective Governments of New Zealand and New South Wales. It will be remembered that the contractors proposed to modify the terms and conditions of the contract entered into in July, 1875. The modifications sought to be secured by the contractors may be succinctly stated as follows : Reducing speed from eleven to ten knots per hour ; twelve instead of thirteen services per annum ; to give up calling at Fiji and performing New Zealand coastal service, and to reduce the subsidy from £90,000 to £BO,OOO ; port of call to be either Bay of Islands or Auckland. New Zealand agreed to modify the service, providing contractors accepted £37,500 if Auckland selected, or £35,000 it Bay of Islands made port of call, the coastal service to be provided in either case by the contractors. The contractors at the outset refused to have anything tp do with the coastal service, and intimated that they would throw up present service, and forfeit penalty, if that condition were insisted upon. Sydney selected Bay of Islands, and New Zealand favored Auckland as port of call, and in this New Zealand was supported by contractors. Sydney did not approve of the resolution passed by the New Zealand House of Representatives on 13tb October last, but submitted the following for reconsideration ; —Two colonies to offer company £75,000 for service San Francisco, Honolulu, Bay of Islands, and Sydney, coastal service to be arranged by the two Governments, and paid for in equal shares. It had been mutually agreed there should be thirteen and not twelve services. The modifications were again discussed in the House of Representatives on *27th October, with this result :—“ That in event of contractors electing to call at Auckland, and desiring to discontinue coastal service, they may be permitted to do so on making further deduction of £SOOO from the subsidy payable to them, the two colonies in such case undertaking to provide for that service at their joint expense.” That was the position in which the matter stood when last brought before the House of Representatives. Further correspondence then ensued. The Postmaster-General of New Zealand wrote to the Postmaster-General of New South Wales on November Ist as follows :—-“After investigation by committee and several discussions, Parliament, now prorogued, has decided as follows' in regard to the San Francisco Service. That the present contract may be annulled, substituting any one of these conditions—(l.) C service, as tendered for by contractors, omitting Honolulu if desired.* (2). Service from San Francisco to Sydney, calling at Auckland or Bay of Islands, at the option of contractors, they performing coastal service, subsidy £75,000. (3). Service from San Francisco to Sydney, calling at Auckland or Bay of Islands ; two colonies providing coastal service at joint expense; deduction to be made from subsidy of £75,000, if Auckland port of call £SOOO, and if Bay of Islands port of call £IO,OOO. If either above services agreed to it may temporarily be commenced at once, pending final arrangements.” In a letter on 2nd November the Postmaster-General adds respecting third proposal—“We mean by this to relieve contractors from coastal service, leaving port of call to be settled by you with contractors, we requiring a deduction from subsidy of £75,000 to cover cost of coastal service. . ' . . .' Saving on contract to be shared equally between colonies, and actual cost of coastal service paid in equal shares.” Gilchrist, Watt, telegraphing on 10th November, say—“ Contractors offer run service via Auckland or Bay of Islands, omitting Fiji, and being relieved of coastal service, for £80,000; but your decisions amount to £70,000 and £65,000 respectively, which we fear contractors cannot accept. This Government anxious for Bay of' Islands, and would give £75,000, but might concede Auckland route and give same sum, which we would recommend contractors to accept. Hope your Government. will offer same amount, as both communities unwilling to let service fall through.” To this the New Zealand Government replies, pointing out that Parliament has fixed the terms, and adding that “the Executive Government do not feel justified in over-riding the decision which has been communicated to you.” The next letter in the correspondence is as follows ;

Colonial Secretary’s Office, Sydney, N.S.W., November 29, 1876. 1. Sir, —I have the honor to enclose, for the consideration of- your Government, copies of two letters from Messrrs. Gilchrist, Watt, and Co., agents for the contractors, on the subject of the Pacific Mail Service. 2. The Government has delayed the dealing with your proposal, and those of Messrs. Gilchrist, Watt, and Co. until now, in consequence of the reluctance to comply with the conditions which you seek to make imperative, at the peril of the total discontinuance of the service.

3. We are unwilling to assent to the extra delay to the mail service of.this colony that would be involved in the making of Auckland the port of call in New Zealand, and we fear that the conditions which you* seek to impose on the company if the Bay of Islands is made the port of coal are such as will lead to the breaking up of the service, for the agents assure us that the company will not .undertake the service either for £70,000 to'’Auckland, or for £65,000 to the Bay of Islands. 4. The only solution which appears to to be open is this—that the company receive £75,000 for the route’ by. way of the Bay of Islands. That this colony paly £40,000 of’ that subsidy, and New Zealand £35,000, the reason for alloting to New South Wales the larger share being that it is this colony that chiefly uses the service for the extra distance from New Zealand to Sydney. , ' ; - 5. New South Wales would thus save £SOOO on the present share of subsidy in consideration of the prolonging of the mail service, and New Zealand would obtain a quicker service by reason of the not calling at Fiji, and would have £IO,OOO applicable to the performance of its coasting service, the cost of which would not be more than £SOOO, or at most £6OOO.

6. This plan would leave New Zealand free to make any arrangement that might suit her for her own coasting service, and quite untramelled by having to submit her negotiations to this colony. 7. In submitting this proposition, we must be understood to do so subject to the approval of our Parliament, which meets next month.— I have, &c., John Robertson. The Hon. the Colonial Secretary, Wellington, New Zealand. In the enclosures referred to in the foregoing Messrs. Gilchrist, Watt, and Co. say; “ In considering these alternatives we would respectfully point out that Nos. 1 and 2 cannot be acceptable to the contractors, inasmuch as their chief object in seeking for a change in the present contract route is to be relieved of the New Zealand Coastal Service, which has proved so dangerous and impracticable to their large ships,” In respect to the third alterna-

tive, proposed by the New Zealand Government, they say: “We are at a loss to understand why the sum of £75,000 is named as the offer made by the contractors to run the proposed new service via Auckland or the Bay of Islands, omitting Fiji and Honolulu (the latter at their option) and being relieved of all expenses and responsibility of New Zealand coast service, is £BO,OOO per annum, and we respectfully submit that it would be unreasonable to expect them to come to the terms named, seeing that in the one case they amount to a reduction of £25,000 per annum, and in the other £20,000 per annum, on the present subsidy under the contract. The . comparative rates for calling at Bay of Islands or Auckland named by the New Zealand 6b> vernment, appear to us out of all proportion, seeing that the two ports are only about 120 miles apart, and the same rate of subsidy is named by the contractors for delivering the mails at either of the two ; hut as they do not express any preference for either, it remains for this Government and New Zealand to decide which they prefer, and we are of opinion that the calling at Auckland would be much more advantageous to New Zealand passengers, and conduce greatly to the increase of trade between New Zealand and this colony, as well as afford other advantages which will more than compensate for the short additional time in postal service.” After referring to the facts that harbor accommodation at the Bay of Islands is slight, and that supplies would have to be obtained from Auckland, as additional reasons why Auckland should be the port of call, Messrs. Gilchrist, Watt, and Co. proceed: “The comparative distances are as follow : —From Sydney via Bay. of Islands, to San Francisco, 7008 miles ; ditto via Auckland do, 7201 miles ; or a difference in time of about 17 hours at H knots ; but in view of the delay attending the calling at the Bay of Islands, from the advantages already set forth, the addititional facilities and despatch the vessel* would obtain in Auckland would in a great measure compensate for the time lost by the detour. .... We therefore respectfully venture to hope that early permission may be granted to change the route to a direct voyao-e via Auckland, and that the Government may arrange to accept the offer of the contractors to perform this service at a reduction of £IO,OOO per annum on the present rate for £BO,OOO per annum.” The second enclosure referred to is as follows ;

Sydney, 22nd November, 1876. Sir, —With reference to your respects dated the 10th instant, addressed to the Colonial Secretary, we have the honor to advise having received the followed telegram from the Pacific Mail S.S. Company, New York, dated 6th November, and we respectfully beg your favorable consideration of the same:— “ Advantage New Zealand business and local traffic Auckland to Sydney make Auckland preferable. Induce Government to yield. Utmost importance commence direct service November. Have calling Honolulu left optional. Hawaiian Government acting unfairly. Answer.” We have also the honor to advise that by the last mail we received advices from Mr. Watt, in London, and he states that he had had several communications with Mr. Russell, of New Zealand, and other colonists much interested in the question, on the subject of the proposed change of route, and it appears to be the general opinion that the simplest settlement of the contract would be as follows: New Zealand to receive her mails at Auckland, and from that port take all cost and risk of their distribution in that colony by coastal service, and the mails of this contract to be brought on here, and (in consideration of the extra distance travelled on account of New South Wales, besides the expenses New Zealand will be put to for her coastal service) that the New South Wales share of the subsidy paid to contractors should be some £SOOO in excess of New Zealand’s contribution. We venture to offer this suggestion as it appears to us fair as between the Governments, and it will relieve this Government of any responsibility in settlements with New Zealand for coastal service, and each Government thus contributes a fair proportion for the services respectively rendered to it.—We, have, &c., Gilchrist, Watt, & Co. Hon. Colonial Secretary, Sydney.

The ColoniaL Secretary, N.Z., to the Colo, nial Secretary, N.S.W. Colonial Secretary’s office, Wellington, 19th December, 1876.. Sir, —-I have the honor to acknowledge receipt of your letter of 29th November, respecting the San Francisco Service, and of the enclosed copy of a letter dated 22nd November, addressed to you by Messrs. Gilchrist, Watt, and Co. 2. I have to state that, whilst desirous to meet as far as possible the wishes of your Government, this Government; cannot consent to any payment on account of the service which is in excess of the authority given, after very careful consideration of the whole subject By the House of Representatives.

3. The details of that authority, as stated in Mr. Whitaker’s telegrams of October 25, November 1 and 2 are :—(1.) That the C Service as tendered for by the contractors may be adopted, calling at Honolulu being omitted if the contractors so desire. (2.) That the boats run from San Francisco to the Bay of Islands, or to Auckland, and from the New Zealand port of call to Sydney ; the contractors to decide the port of call, to perform the coastal service, and to receive £75,000 per annum subsidy. (3.) The boats to run as in No. 2; but the coastal service to be arranged for by the two colonies. If Auckland be the port of call, £SOOO to be deducted from the subsidy of £75,000 ; if the Bay of Islands, £IO,OOO to be deducted ; any saving on the present contract to be divided equally between the colonies, and each to pay half the actual cost of the coastal service. (4.) This Government reciprocates the desire expressed by you not to do anything which will lead to the breaking up of the service ; but I must point out to you how very much worse for this colony, than those bontemplated by the House of Representatives, are the conditions which you state seem to offer the only solution of the existing difficulty. You-suggest that the Bay of Islands shall be our port of call, although the contractors themselves, by their telegram of 6th November to Messrs. .Gilchrist, Watt, and Co., recognise that very valid reasons make Auckland the preferable port. You suggest further, that for this service-—San Francisco to Bay of Islands and Sydney—New Zealand should pay £35,000 towards a subsidy of £75,000, and should pay the whole cost of 1 its coastal service. You will see that under these conditions .the contractors would receive £IO,OOO a year more, and that New Zealand would pay £7500 a year more than was considered by the House of Representatives to be reasonable under such arrangements. It has been before explained to you why it is felt that a coastal service from the Bay of Islands cannot be efficiently performed for a less subsidy than £IO,OOO ; and, therefore, in addition to the consequences just stated, New Zealand would, under your proposals, have to pay £SOOO a year for the service in excess of the New South Wales payment. (5.) The arrangement suggested to you would, in other ways than that stated, be most disadvantageous to New Zealand, not only as compared with New South Wales, but as compared with what was originally contracted for. New Zealand has now her coastal service performed by the main line boats ; passengers from or to the colony are conveyed by them with the least inconvenience consistent with a “ fork service,” and the possibilities of trade with the United States are not checked by the existence of bad shipping arrangements. Under your proposals passengers would be inconvenienced, wharf accommodation would have to be provided at the Bay of Islands, and the coastal service to ami, from that port would cost about double tJj sum for which, with the same class of boats, it could be worked with Auckland as the port of call. New Zealand now shares the advantages of having a terminal port for the service ; but the plan proposed by you would give those advantages wholly to New South Wales. (6.) For these reasons your proposal would be inadmissible, even had the House of Representatives not so carefully defined the limits ■within which the liability of the colony is to-

be kept. It must be remembered that modification of the service was sought iu the interest of the contractors and in view of all the negotiations and Parliamentary discussions on the subject, we are, while very desirous _to see a service by way of San Francisco maintained, compelled to repeat that no arrangements which are less favorable than those specified by the House of Representative can be accepted by this Government. We would, should you so desire, undertake to arrange and pay for the coastal service, provided that Auckland be the port of call, and New Zealand s contnbution to the subsidy be not more than 0. This with the cost of a coastal service to and from Auckland, which is estimated at £SOOO, would make New Zealand’s total payment £37,500, and that is the limit fixed by our Parliament. —I have, &c., H. A. Atkinson.

Messrs. Gilchrist, Watt, & Co., N.S.W., to the Colonial Secretary, N.S.W. Sydney, December 80, 1870. , > Sn> We have the honor to advise the receipt by us this day of the following telegram from New York, 25th December.. - “If necessary compromise Auckland till Bay Islands now impracticable is lightered (? li.'bted), and transfer facilatie (? facilities) provided; will make same time by either route; immediate change necessary. We have also received, under same date, a telegram from the head office, in reply to ours, asking the cost of direct service, which says;— • “ Expense of Sydney service practical (? practically) same as via New Zealand.”—We have, &c., Gilchrist, Watt, & Co., General Auents for the Contractors, San Francisco Mail Service. Messrs. Gilchrist, Watt, & Co., N.S.W., to the Colonial Secretary, N.S.W. Sydney, January 9, 1577. Sir, —With reference to our interview and the discussion as to the difference in time between the route via Auckland and Bay of Islands, we have the honor to refer you to our respects, dated 30th ultimo: — “Will make same time by either route.”— We have, &c., Gilchrist, Watt, & Co., Agents for the Contractors, Californian Mail Service. The Principal Under Secretary, N.S.W., to Messrs. Gilchrist, Watt, & Co., N.S.W. Colonial Secretary’s Office, Sydney, 10th January, 1877. Gentlemen, —With reference to your letters of the 10th and 22nd November last, and other communications concerning proposed modifications of the Pacific Mail Service, I am now directed by the Colonial Secretary to transmit to you the enclosed copy of a letter which he has received from the Colonial Secretary of New Zealand in answer to a letter addressed to him on that subject on the 29th of November. 2. With regard to this matter the Colonial Secretary desires me to state that this Government is willing, subject to the approval of Parliament, to contribute £10,090 to the subsidy, for a service by way of Auckland, provided the contractors undertake to make up the twenty hours difference in time between the service by way of Auckland and that by way of the Bay of Islands, this Government being free from any contributions iu respect of the New Zealand coasting service. 3. In view, however, of the large concession which this Government is prepared to make, it is suggested that the term be reduced to three years. —I have, &c., Henry Halloran. Messrs. Gilchrist, Watt, & Co., N.S.W., to the Colonial Secretary, N.S.W. Sydney, January 11, 1877. Sir, —We have the honor to acknowledge , receipt of your letter of yesterday’s date, handing copy of letter received from the Colonial Secretary of New Zealand, in reply to your letter of 29th November, regarding the proposed modification in the Pacific Mail Service, and also stating the terms on which yon are willing to assent to the said modification. We have cabled to the Pacific Mail Steamship Company the purport of the above letters, and on receiving their reply we shall at once communicate with yon.—Wejaave, &c., Gilchrist, Watt, & Co., General Agents for. the Contractors, , 1 Californian Mail Service. Colonial Secretary, Sydney, to Colonial ' Secretary, New Zealand. Colonial Secretary’s Office, 1 Sydney, 22nd January, 1877. : SlB, —With reference to your letter of the 19th ultimo respecting proposed modifications of the Pacific Mail Service, I have the honor to transmit herewith, for your information, copies of communications on the subject that have passed between this office and Messrs. Gilchrist, Watt, and Company, the general agents for the contractors for the San Francisco Mail Service.—l have, &c., John Robertson. The Hon. Colonial Secretary of New Zealand, ‘ Wellington. Meesrs. Gilchrist, Watt, & Co. to Colonial : Secretary, New South Wales. Spring-street, Sydney, Jan. 20,1877. ' Slß,— With reference to your letter (77/144) dated 10 th instant, we have the honor to advise that we telegraphed at once to the Pacific Mail Steamship Company, New York, to the following effect, viz.;— j;“ From Gilchrist, Watt, & Co., Sydney, to Pacific Mail Steamship Company, New York. —Service Frisco Honolulu, optional Auckland, and vice versa. New Zealand Government ■willing pay £32,500, that Government receiving mails Auckland and undertaking distribution and coastal service thence. This Government willing subject approval Parliament contribute £40,000, provided contractors undertake to make up the twenty hours difference in time between service by Auckland and Bay Islands. Shall we accept on your behalf ? Answer. Government suggests reducing term of contract to three years. Answer.” “And have this morning received the following answer from Clyde, President, New York ■

1 “ Accept £72,500 if cannot obtain £7 5,000. Dp no,t reduce term of contract. Obtain permission to commence direct sea (?C) service immediately.” "We have the honor to request that the above may have your early consideration, in order that the direct “C” service may be commenced without delay from both ends.—We have, &c., ! ' : Gilchrist,- Watt, & Co. Sydney, loth February, 1877. ; "We are awaiting your reply to letter of 22nd January, forwarding for your information copies of correspondence with Messrs. Gilchrist, Watt, and Co. respecting Pacific Mail Service. > Colonial Secretary. To the Colonial Secretary, Wellington. Wellington, 16th February, 1877. Terms agreed by contractors. Agree with those proposed in letter 19th December, namely, that we pay £32,500 and have risk of coastal service, Auckland being port of call. George McLean, Postmaster-General. To the Colonial Secretary, Sydney, In reply to the above, the New Zealand Government were, informed yesterday by the Colonial Secretary of New South Wales that a resolution with regard to the mail service was about to be submitted to Parliament.