D.—No. 1A.

Panama Cowthact. The correspondence on this subject having been already printed and widely circulated, it is unnecessary here to make further remarks on it, especially as it will form a subject of important consideration for next meeting of the General Assembly. Steam Postal Services. Anglo-Australian Service. This service has been performed during the past year by the Peninsular and Oriental Company with greater punctuality than formerly, the mails having with one or two exceptions arrived in Australia at or before their due date. There is every reason to expect an increasing punctuality, and proposals have been made for the establishment, by the Peninsular and Oriental Company, at a very small increase on the present subsidy, of a fortnightly instead of the present monthly service. "Were this proposal carried into effect the course of post between England and New Zealand would be reduced to •!.} months, whilst by the progressive extension of telegraphic communication with England, important intelligence may always be received by that route up to within about 43 days of its arrival in New Zealand. In consequence of the determination of the Imperial Government to continue convict transportation to Western Australia, it has been proposed by the Colony of Victoria to cut off communication with that Colony by the Mail Steamers, and threats have been made that if that oourse be not agreed to the Colony of V ictoria will withdraw its contribution to the present main line of mail service. However objectionable the system of transportation to the colonies may be, the mode thus threatened to be adopted cannot be considered a wise one, nor one likely, upon mature consideration, to be adopted. Proposals have been made by the Colony of Queensland for the co-operation of this Colony in the establishment of a postal line via Singapore and Torres Straits, but these proposals have been declined until it be shown what advantage New Zealand could derive from such a line. The contribution of New Zealand to the existing Anglo-Australian line for the current vear amounts, as will be seen from the annexed papers, to £16,771 12s. Intee-coloniai Sehvices. The Melbourne and Otago service has, since the 11th January, 1864, been most efficiently performed by the contractors at a subsidy of £17,000 per annum. It terminates in January, 1865, and as the decision of the Assembly on the Panama contract might seriously affect the necessity for this line, it is proposed to call for fresh tenders for 6 months only. It is believed that the service will be tendered for at a rate much lower than the present one. The service between Sydney and Auckland has also been efficiently performed by the Inter-Colo-nial Company during the past year. Proposals, however, have been made by the Auckland Chamber of Commerce, and by the Government of Victoria, for the change of the Australian port from Sydney to Melbourne. This would certainly give to Auckland an earlier arrival and later departure of its English mails, and would, to a small extent, reduce the contribution payable by New Zealand to the Suez line. As, however, notice has, in accordance with the resolution of the Assembly, been given to the InterColonial Royal Mail Company of the termination of their contract in November 1565, it has not been thought advisable to make any alteration of port until the General Assembly shall have had an opportunity of dealing with the whole question The service between Sydney and Nelson has, during the past year, been efficiently performed, The subsidy of £1600 per annum for the continuation of this line from Nelson to Otago has been discontinued, as the new arrangements for the Inter-Provincial Rervipps rendered that line unnecessary. At the request of the Company the date of departure from Sydney was altered, so as to provide for the arrival of the English mail at Nelson several days earlier than under the former arrangements. ■ Inter-peovincial Services. In accordance with the resoluiions of the House of Representatives 'last session, the Postmaster General, on the termination of the then subsisting contracts, called for tenders for a bi-weekly inter-pro-vincial service. Sufficient tenders for theservicewere not received, and the Inter-Colonial Company having pointed out the injustice to which such a service would subject them, and declined to co-operate in it, the Postmaster General determined to obtain as efficient a service as possible for the amount voted by the General Assembly. After considerable negotiation with the Inter-Colonial Royal Mail Company and thoNew Zealand Steam Navigation Comvnny, he succeeded in arranging the present service, by which a steamer leaves and arrives at Auckland, Wellington, Lyttelton, and Otago every fifth day, and at each of the other ports every tenth day. Punctuality of arrival and departure has been rigorously insisted upon, and the services have been performed most satisfactorily by both companies. The subsidy paid to the Inter-Colonial Royal Mail Company is about ss. per mile, whilst that paid to the New Zealand Steam Navigation Company is about 3s. lid. per mile. The boats of the latter Company are not so large as those of the former, but it is hoped that the rapidly increasing passenger trade of the Colony will soon justify the placing of larger and more powerful vessels on the coast. No wreck of any of the subsidized Steamers has occurred during the past year. Reports from the Telegraphic Engineer, Mr. Sheath, as to the progress of the Telegraph, and from the Marine Board as to the progress of Lighthouses, are hereto annexed. Thomas B. Gillies. General Post Office, Auckland, November 1864.

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NEW ZEILAND MAIL SERVICE.