F.—2a,

SAN FRANCISCO MAIL SERVICE (FURTHER PAPERS RELATIVE TO). [In continuation of Papers presented on the 28th of May, 1880.]

Presented to loth Houses of the General Assembly by command of His Excellency.

No. 1. Mr. R. J. Creightojt to Mr. Gray. ;.Sir, — San Francisco, May 8, 1880. I have the honor to state, in reference to the correspondence on the overland freight charges, that I am more convinced than ever before that the United States Government will take a liberal view ■of the matter, and assist the contracting colonies to carry out their contract engagements, and continue the mail service to Europe via San Francisco. 2. Since last mail I have had an interview, by arrangement, with Mr. Towne, Superintendent; of the Central Pacific Railroad, E. H. Miller, Secretary, together with the general freight agent, and other gentlemen connected with the institution. They were most anxious to meet my views in every way, but were tied up hand and foot with Congressional legislation. If it had been a plain matter of business I should have had no difficulty whatever with them ; but it is not. It involves the most delicate, and at the same time, the most important question of public policy in the United States, namely, the relation of the great transportation companies to the Commonwealth, complicated further by the relation of the great subsidised trunk lines towards the Government, arising out of outstanding bonds, interest, and conflicting legislation. 3. Of course it was not to be expected that the Executive officers of a subsidised Corporation, whose annual revenue exceeds £1,000,000 (pounds sterling net), should make concessions in any way breaking down a contract entered into by the U.S. Government with a foreign power for the use of their road, whether it was profitable or otherwise to them, but they were willing to discuss it as a business proposition, and expressed themselves anxious to meet my views in the matter. And here I have to express my sincere thankfulness for the very comprehensive and suggestive discussion of the whole question by the railroad officials, and I acknowledge in this place their valuable suggestions. 4. Our interview resulted in a general understanding regarding freights, which may be shortly -stated. In brief, it was this :—That rather than see the Australian and New Zealand mail break down they would aid me in making a separate agreement with a Transportation Company to carry our mail across the Continent, at rates greatly under those charged by the U.S. Government, under the . agreement between Sir E. Thornton and Hon. Mr. Tyner; that I was to apply to the British and American Postal Departments to ascertain how far we were bound by the International Postal Convention, and the agreement referred to, to transfer our mails in the regular U.S. mail railroad car; that upon ascertaining this fact I was to meet them again, when the special service would be arranged on terms advantageous to the Colonies. It was further understood that in this matter I was acting independently. I could see no other way out of the difficulty, the Railroad Company being tied up by Congressional legislation on the one hand, and the Colonies being tied up by a castiron rule of action by Great Britain •on the other. 5. I discussed the matter thoroughly, and arrived at a clear and intelligent understanding, and thereupon wrote the letters following, namely, one to Sir Julius Vocel, Agent-General of New Zealand, in London, and one to the Hon. Mr. Money, Chairman of the House Committee, on Post Offices and Post roads. I have not received any reply from Sir Julius, but Mr. Money has replied to me, by Congressional action, through the Hon. Horace Davis, representing San Francisco in Congress. 6. In a telegram from Washington, dated 4th May, which was published in the San Francisco papers, the following appeared :■ — " TIIK AUSTRALIAN SUBSIDIES. " Representative Horace Davis has prepared an amendment which he will offer to the pending Post Office Appropriation Bill, providing authority for the Postmaster-General to remit in favor of the Colonies ■of New Zealand and New South Wales so much of the overland transportation of their mails as he may I—F. 2a.

1880. NEW ZEALAND.