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Company in Australia and New Zealand; and also that they are invested with full powers from the owners of the "Zealaudia" and "Australia," which are chartered to the Company in question. I have, &c, S. H. Lambton, The Secretary, General Post Office, Wellington. Secretary.

No. 103. Mr. Gray to Mr. Lambton. Sir, — General Post Office, Wellington, 4th April, 1876. I have the honor to acknowledge the receipt of your letter of the 16th ultimo, enclosing copy of a communication addressed to the Postmaster-General of New South Wales by Messrs. Gilchrist, Watt, and Co., of your city, notifying their appointment as General Agents to the Pacific Mail Steamship Company in Australia and New Zealand ; and, in thanking you for the same, I have to state that Messrs. Gilchrist, Watt, and Co. had already apprised the Postmaster-General of this colony of the appointment in question. I have, &c, W. Gray, The Secretary, General Post Office, Sydney. Secretary.

No. 104. The Colonial Secretary, Sydney, to the Hon. Sir J. Vogel. (Telegram.) 23rd March, 1876. Urgent. Watt has received following telegram from the Pacific Mail Company, London:— " Have run line since November first at loss of two hundred thousand dollars. The Company unwilling to proceed further unless prompt payment made for past services. Answer fully cable." What do you think best to be done under circumstances ? Reply. Colonial Secretary. The Hon. Sir Julius Vogel, Wellington.

No. 105. . The Hon. Sir J. Vogel to the Hon. the Colonial Secretary, Sydney. (Telegram.) 23rd March, 1876. In reply to to-day's telegram, how can I advise about payment to Company when I have no knowledge what steps you have taken consequent upon agreement by telegraph that you would propose to Company not to consider past services part of contract ? Understood you took this negotiation completely in hand. If Company insist upon rights, so I think should we. In that case, we should pay such services as may be considered within contract, deducting penalties, whilst for those not considered within contract refuse payment, or make payment we considef justifiable. The Hon. the Colonial Secretary, Sydney. Julius Vogel.

-__n__M_____MMMM__________H_nMi_____n No. 106. Memorandum by the Hon. the Postmaster-General of New Zealand. The Postmaster-General has had the subjoined statement prepared in order to afford the grounds for judging whether or not it is desirable to continue to make efforts to maintain the San Francisco Service. The new Contractors have failed to perform the service iv accordance with the contract, and the two Governments have as yet withheld all payments. The New South Wales Government are to propose, in accordance with the arrangement agreed upon at the conference by telegraph, that the service shall only be considered to commence with the February mails. Supposing the Company decline to accede to this, and press for payments, the question is, should they be dealt with strictly ? The statement subjoined shows, in the opinion of the Postmaster-General, that the interests of the colony require that no effort should be spared to keep up the service. The net cost of the two services is estimated to be .231,277; whilst, supposing the Suez were the only service, the estimate shows a net cost of ,€15,896 —in other words the additional cost of the Californian Service is only £15,381. But, as Mr. Gray very properly points out, this difference is a continually diminishing one as the number of letters increases, since by the Californian Service the colony keeps the postages, whilst under the arrangement with Victoria the payment to that colony for the Suez Service is always in excess of the postages received. Every letter by Suez increases the net cost to the colony, every letter by California diminishes it. The Postmaster-