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SAN FBAN 01800 SERVICE.

CONTRACT WITH THE OCEANIC COMPANY, ETC.

No. 1. The Hon. the Postmaster-General, Wellington, to the Hon. the Postmaster-General, Commonwealth of Australia, Melbourne. S IR) _ General Post Office, Wellington, 13th May, 1905. Adverting to our late discussions respecting the payment made by the Commonwealth for the conveyance of Australian mails by the San Francisco service, and the rates paid by New Zealand for the carriage of its outward correspondence by the Peninsular and Oriental and Orient steamers, I would again urge you to extend more liberal treatment to the San Francisco service than is represented by the present payment of 2s. per pound for letters and 4s. per hundredweight for other matter, a contribution, in my opinion, entirely out of keeping with the value of the service to the Commonwealth. It may be convenient if I briefly refer to the history of the payments as applied to ocean mail-services, so far as they have obtained between New Zealand and Australia. In connection with the Panama service, established in 1866, the London Post Office calculated that £1 ss. 4d. per pound was the equivalent, of the postage on letters, Is. 6d. on books, and Is. newspapers. These amounts were paid to New Zealand and New South Wales by the London Post Office for their providing the service between Sydney, Wellington, and Panama. Non-con-tracting colonies also paid the same rates. On the other hand, New Zealand paid the Australian Colonies similar poundage-rates for the use it made of the Peninsular and Oriental service. The Panama service ceased in 1869, and was replaced by the San Francisco service in March of the following year, and for a time these payments were mutually continued. In 1891, it was agreed that the poundage-rates in respect of both services should be reduced to 12s. per pound for letters, Is. for books, and 6d. for newspapers. The contributions from non-contracting colonies to the San Francisco service were paid over to the contractors, instead of being retained by this office, as had been the practice previously. In contracting with Messrs. Spreckels in November, 1900, for the renewal of the San Francisco service, it was decided that New Zealand should no longer collect the non-contracting colonies' contributions, but leave the contractors to make their own arrangements with the colonies. It should be mentioned that for some time previous to 1900, and until Messrs. Spreckels took over the service in that year, New South Wales made a fixed contribution of £4,000 a year to the San Francisco service. New Zealand entered the Postal Union in 1891, and reduced the letter-postage to Great Britain to 2|d. The Sydney Post Office was advised of this, and also informed, as already mentioned, that the rates for the use of the San Francisco service by non-contracting colonies had been reduced to 12s. per pound for letters, Is. for books, and 6d. for newspapers. As New Zealand would probably make regular use of the Peninsular and Oriental and Orient services—the direct service not having been renewed —the Sydney Post Office was asked whether the Australian Colonies would not agree to allow this colony the use of the Peninsular and Oriental and Orient services for the equivalent of the bare postages. At the same time the Sydney Post Office was also reminded that all recoveries from non-contracting colonies were paid over by us to the contractors. The reply was that the " Postmaster-General thinks the fairest arrangement is to follow the recommendations of the heads of Departments at the Sydney Conference, and charge 12s. on letters by both San Francisco and Suez routes." It will thus be seen that New Zealand has been paying 12s. per pound for letters, Is. for books, and 6d. for newspapers for sea carriage by the Peninsular and Oriental and Orient services since 1891. It was only during the short break between the termination of the late Peninsular and Oriental and Orient contracts, and the new one made in March last with the Orient Company, that the Commonwealth intimated that we could have the use of the services at the reduced poundage-rates of 2s. per pound for letters and 4s. per hundredweight for other matter. Since then it is understood that we may make use of the services on payment of Postal Union rates. Our payment for sea carriage of our outward mails in 1904 from Adelaide by the Peninsular and Oriental and Orient services was £4,031. At Postal Union rates the payment would not have exceeded £1,400. The Commonwealth, however, does not even pay Postal Union rates to the San Francisco service, but the local rate of 2s. per pound for letters and 4s. per hundredweight for books and newspapers, a payment, as already indicated, entirely inadequate to the value of the service to the Commonwealth, and especially to Sydney, which is the terminal port, and benefits to the extent of over £62,500 a year spent in coaling and victualling the ships.