F.—3c

2

7. I am quite prepared to go beyond the agreement in one respect, and to give a gratuity for efficiency of the same amount as the highest penalties for failure, namely, £150 for each day which the ships of the service perform the passages under contract time. 1 have, &c, The Hon. the Colonial Secretary, New Zealand. Henry Pabkes.

Enclosure in No. 1. Extract of a Telegram from the Honourable Saul Samuel, London, to the Colonial Secretaby, Sydney. Received 29th August, 1873. 27th August, 1873—Arranged with Russell, subject approval of both Governments, New Zealand paying half entire subsidy—Steamers all to be 2,500 tons gross or 2,000 register—Through steamer to leave Kandavau alternate trip for Sydney and New Zealand, same arrangement returning, transhipping into steamers same tonnage and specd —This will cause no more delay at Kandavau than branch service—Time twenty-five days —Contractors agree to £80,000—Penalty up to thirty days £150, then £50 —Contractors to receive all subsidies they can get, except Colonies and England. By Authority: Geobgb Didsbfby, Government Printer, Wellington.—lB73. [Price 3d.]