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Post Office for the contracting colonies, on account of the American section of the service would disappear, and the colonies could demand restitution of their withheld postages. 10. Your reply at the earliest possible date would be esteemed a favour. I need hardly say that so far I have acted solely on behalf of New Zealand, and that there are urgent reasons, at the present stage, why this matter should not be made public. I have, &c, Sir Julius Vogel, K.C.M.G., Rort. J. Ceeighton, Agent-General for New Zealand, London. Agent New Zealand Government.

Enclosure 2 in No. 1. Mr. R. J. Creighton to the Hon. Mr. Money. Dear Sir,— San Francisco, April 25th, 1880. I have pleasure in acknowledging the receipt of your letter of 21st ultimo, together with inclosure of the Hon. Mr. Key's letter, for which accept my thanks. I would have written in acknowledgement earlier, but waited for advices from the colony before doing so. 2. I have transmitted copies of your correspondence to the New Zealand Government, and I am satisfied that they will feel as I do the very great obligation the contracting colonies are under to you for your friendly action in this matter. 3. I regret exceedingly that the Hon. Postmaster-General does not see his way to recommend a remission of the transit charges, because this action by the U.S. Government would go far towards increasing the commercial relations already subsisting between Australasia (including New Zealand) and the United States. Conditions have arisen out of this ni'ail business which would render a display of generosity by this Government of exceeding great value in this direction, the dissatisfaction, with the dictatorial attitude of the British Post Office Departments becoming marked, as I learn from my Colonial letters ; but, if nothing is done, of course the golden opportunity may pass. And despite the statements by the Post Office Departments in Washington, I am satisfied that the concession would cost the Treasury an insignificant sum. I say this, because I have taken steps to ascertain the payments by the Department to the Railroad Companies. Taking the weight of the British enclosed mails for the month of March last as an average of the year (although considerably over the past average), the Central Pacific Railroad for its 883 miles of services would receive $11,500, without deducting 15 per cent, per annum for interest on account of subsidized roads—say $12,000 per annum—upon the scale of payments for the transportation of domestic mails, which the Hon. Postmaster-General states, is the scale adopted for the British enclosed mails. Now, taking this section as one-fourth the distance between San Francisco and New York, the actual payment for railroad freight on the British enclosed mails to and from England and the Australian Colonies would be $48,000, not $75,000 odd which the United States Post Office Department receives under agreement with Great Britain (Vide Annual Report of the Postmaster-General, pages 509-10). Upon investigation, I think it will be found that the actual payments upon this account to the Railroad Companies concerned do not exceed in the aggregate $40,000 a-year. But as it may be difficult to get the exact figures, I suppose the departmental statement, vague and general as it is, must be accepted as we find it. The difficulty is, that the British enclosed mail is not weighed separately, but is taken to account with the domestic mail. As, however, the question has become pressing, owing to the charges made by the British Government against the Colonies, it has occurred to me whether I could not arrange for the transport of the enclosed mails across the Continent without putting the United States Government to any expense beyond the receiving of them in New York, from the Transportation Agent, and forwarding the home-bound mail in regular course to England, delivering the outward-bound mail to the Transportation Agent, or a representative of the Contracting Colonies in New York, as might be determined on. 4. The only expense your Government would be put to, were this arrangement perfected, would be overhauling the mails at New York, where the facilities are so great as to render it a work of trivial importance. I believe I can make the arrangements for doing the work at about half the sum now charged ; and although I do not think it politic or economical even in a great Government like the United States, to compel two small dependencies of the United Kingdom to make special contracts of this nature, for the sole purpose of maintaining commercial and postal relations with this country against the declared policy of Great Britain; nevertheless something of the kind must be done, or the service probably will not continue until the expiration of the existing contract in 1883. This I gather from my official letters from New Zealand. When I inform you that at least 10,000 letters, originating in the United States, are carried free to New Zealand and Australia every year by the colonially subsidized ■steamers, a corresponding number being received in reply, to say nothing of printed matter, samples, <fee. ; and the Honolulu Mail, the importance of the service to this country, must be apparent and entitled to be placed upon the footing of a domestic service. 5. The " City of New York " just airived ; brought over 300 passengers, of whom the vast proportion were from the Colonies, nearly 200 being cabin passengers. This fact illustrates the importance of the passenger travel to the commercial and manufacturing interests of the United States. 6. Might I trouble you, therefore, to see the Postmaster-General, and ascertain how far he is prepared to co-operate in this matter, or whether it would be necessary to arrange for the through service without reference to the United States Post Office Department. From the tone of the Hon. Mr. Key's letter, I am encouraged to prefer this request through you, and perhaps you might, if you deemed it advisable, ask the Hon. Horace Davis and Senator Booth to accompany you. The interest you have taken in this matter emboldens me to prefer this request to you. Furthermore, would it be necessary to give any formal notice to your Government before taking action in the direction named. 7. It is, I know, a delicate position, owing to the existing contract with Great Britain; but as this 2—F2a.