P.—4

38

as they could not in an English port ship a crew for an American steamer. He said something, also, about arranging locally in case of a breakdown. I replied, that I doubted if it would be a loss to the Company, as repairs could be cheaply effected in Sydney, and occasionally one of the three vessels could be laid up and the fourth one used. But whether or not it was a loss, I expressed my conviction that the two Governments had suffered enough from temporary arraugements, and would require the spare vessel at Sydney. I told Mr. Clyde that I thought the Contractors were sufficiently well treated in being released from one boat, and they ought to bo contented. He said they meant to use four boats, and he wanted the second clause of the contract to be modified to that effect only, leaving tho Company the option of stationing the fourth boat where they liked. I replied, I was sure the Governments would not agree to this, and that I should feel it my duty to telegraph, advising the Governments to stipulate that the fourth boat should be stationed at Sydney. On further consideration, I determined to delay telegraphing till I reached England and had an opportunity of communicating with the Agent-General of New South Wales. I have already had an interview with that gentleman, and I found that he was disinclined to communicate with his Government upon the subject by telegraph. I have therefore abstained from telegraphing, and will not do so unless I think urgent necessity arises. In coming to this conclusion, I have been partly influenced by the difficulty of explaining the matter in a few words, and partly by thinking that my telegram, without one to the Government of New South AVales, might create a difficulty, rather than be an aid to you. Mr. Clyde asked me if I could make any suggestions as to improving the working of the line. I think it desirable to mention to you the suggestions which I made in response to this invitation. I advised that arrangements should be made for booking passengers through to or from Australia, or New Zealand and England ; that measures should be taken to make the line better known, by advertising, and by the issue of a carefully prepared and elaborate guide book; that invitations should be given to associations of farmers, manufacturers, or others, in America, to send down representatives to the colonies, to report upon them as fields for enterprise ; that, in order to increase the number of steerage passengers to the colonies, passages on credit should be given to miners and others, promissory notes being taken for the cost, with an addition to cover risks. I advised, also, that the Australian line should be worked in connection with the Japan and China line, facilities being given for through passages and freight. The Company run their steamers between San Francisco and Japan in about sixteen days, so that through connection can be made very rapidly. I also told Mr. Clyde that I thought he might possibly arrange for carrying Chinese from San Francisco to North Australia. I should not be surprised [if there is shortly a large exodus of Chinese from California to Northern Australia. Of course, these suggestions were unofficial, and made for what they were worth. Any advice which tends towards making the line pay is so much aid to its continued existence, as it can only continue if it become a commercial success. Mr. Clyde was very much interested in particulars which I gave him about compressed fuel. I instituted careful inquiries in San Francisco and elsewhere about the position of the Company, and lam glad to say that the opinion is unanimous that- it has very much improved. Every one seems to agree that the management is now very careful, and the results of the large operations of the Company satisfactory. In conclusion, you will allow me to express tho hope that the steps which I have taken in connection with the letter to the President of the Company with which the Premier intrusted me, and the particulars I have herein set down, will commend themselves to the approval of the Government. I have, &c, Julius Vogel, The Hon. the Postmaster-General, Wellington. Agent-General.

No. 128. The Hon. J. Robeetson to the Hon. the Colonial Seceetaey, Wellington. Sic, — Colonial Secretary's Office, Sydney, 22nd January, 1877. 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, AVatt, and Co., the general agents for the Contractors for the San Francisco Mail Service. I have, &c, The Hon. the Colonial Secretary, Wellington. John Robertson.

No. 121

Enclosure 1 in No. 128. Mr. Halloean to Messrs. Gilcheist, Watt and Co. Gentlemen, — Colonial Secretary's Office, Sydney, 10th January, 1877. AVith reference to your letters of the 10th and 22nd of November last, and later 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 November. 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 £40,000 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 contribution in respect of the New Zealand coasting service. In view, however, of the large concession which this Government is thus prepared to make, it is suggested that the term be reduced to three years. I have, &c, Messrs. Gilchrist, Watt, and Co., Sydney. Heney Halloean.