THE PANAMA CORRESPONDENCE.

Otago Daily Times, Issue 784, 18 June 1864, Page 5

THE PANAMA CORRESPONDENCE.

The following letters and memorandum, shewing the action taken by the General Government, and their reasons, are among the correspondence ; now published :—

Mr Gillixs to Mr Wood. New Zealand General Post Office, Auckland, 7fch March, 1864. Sir—l have the honor to inform you that by the December mail delivered here on the 25th. Ult., the Government received from Mr Crosbie HTard the contract entered into by him with tha I Inter-colonial Mail Steam Packet Company for Ithe Panama service, and for Inter colonial aud »Inter-provincial services. In the absence of any ; explanation from Mr "Ward of the grounds on (which he considered himself authorised to enter 'into such a contract, and in the absence of Captain J. Vine Hall, who was expected here to confer with the Government, prior to the departure of the mail, it is not the intention of the Government to state conclusively their views in regard to the contract. They feel, however, that it is due to the jsompany to inform them

through you at the earliest possible moment, that until secspted and ratified by this Government, the contract made by Mr Ward cannot be considered as in any respect binding on the oolony. I have. *c , , Thomas B. Gillies Mr Fox to Mr Wood. New Zealand, Genera! Post Office. 7th April, W*Sir—By last mail, the honorable e;r wim's had the honor of addressing you on the subject of the Panama Contract, and I now propose putting you in possession definitively of the views ot the Government thereon. The arrival in the colony of Mr Ward, since the date of my last, has placed the Government in possession ot that gentleman's views and explanations on the suofect of the contract, as well as of the various communications which passed b tween himselt and the company in the matter. . After a most anxious and careful consideration of the provisions of the contract itself, of tne correspondence connect3d therewith, of tie powers and instructions of Mr Ward, and ot their own powers, the Government have been compelled reluctantly to arrive at the conclusion that they cannot recogni>e the contract, as binding on the colony, and that no action off their part could bind the colony to a contract, the provisions of which (however advantageous in some respects) are in such direct antagonism to the expressed ■will of the Legislature. In order that you may fully understand the reasons which have compelled the Government to adopt a course which must be productive of much embarrassment to the company, and which, in the absence «f explanation, might be capable ot being represented in a light unfavorable to tue character and credit of the colony, I enclose a memorandum on the subject, which will, 1 thinK, clearly show that this Government ha I no other course open to them than that which they have adopted, and that the company were at the tune they entered into the contract fully aware that Mr Ward was not empowered to enter into the contraut on behalf of the colony. You will be so good as to communicate to tne company the conclusion at which the Government have arrived, at the same time informing the company that the whole mavter will be laul • before the House at its first meeting, probably not later than March next, when it will be open to that body to adopt the contract. At the same time this Government will not feel ife their duty to recommend that course to the House unless the monopoly of inter-provincial and inter-colonial services be abandoned by the company, the mterprovinoial time-table altered, and arrangements be made by which the entire course of post from England to Sydney, and back, he brought within four months, inclusive of sufficient time at Sydney for reply by the return wail steamer. Any proposal to this effect which tne Company may have to make will be laid before the Assembly, and this Government will be prepared to recommend its consideration in the most liberal spirit. I have, &c, William Fox, For the Poitmaster-General.

Enclosure. MAIL SERVICE "VIA PANAMA."

la the session of the Colonial Parliament, 1862 4LBth August), the following resolutions were passed relative to steam communication via Panama, and also relating to inter-colonial and inter-provincial steam communication. (1.) That the establishment of regular monthly steam communication between New Zealaud and the United Kingdom via Panama, is calculated to coufer very great benefit upon this colony. (2.) That considering the probable expense of such an undertaking, it is desirable that the service should be so constructed as to confer advantage upon and obtain the support of the neighboring colonies. ,' That this Committee recommends tne appropriation of a sum not exceeding thirty thousand pounds per annum, from Ist January, 1864, for five years, as a contribution towards the colonial portion of the subsidy for such a service. (4.) That the requirements of the colony will not be fully satisfied with less than three lines of inter-colonial steam service, viz, between Melbourne and the South; between Auckland and Sydney; and between Cook's Straits and Sydney respectively. (5.) That in making any contract to carry out the steam postal service, the General Government shall avail itself of the assistance of the Provincial Government, and obtain if possible their concurrence in the same. (6.) That communications should be maintained between the principal Provinces of the colony four times a month, and between all the Provinces twice a month, provided that the whole expense of such inter-provincial service do not exceed twenty thousand per annum. (7.) That all future contracts with the owners of steamships for the conveyance of her Majesty's mails shall be contracts ending only from year to year, determinable by six months' notice from either contracting party to the other. The first, second, third, fourth, an.3 sixth of these resolutions were on the motion »f Mr Ward. : Based on the first three of these resolutions the Panama Steam Postal Act, 1862, was passed. These resolutions and the let are vhe sole authority given by the Legislature for the government of the colony entering into any contract on behalf of the colony for the establishment of the Panama route. Shortly after the passing of the Act, Mr Ward proceeded to England with the instructions and authority, copy of which is attached; at a later period the enclosed letter was sent to him. In these are contained all the powers and instructions given by the Legislature, Government, or Governor, in reference either to Panama, Inter-colonial, or Inter-provincial Steam Postal Services. On Mr Ward's arrival in England, he appears to have negotiated first on the basis of the above Act, and in co-operation with the New South Wales representative as that Act contemplated; tut finding it impossible to conclude an arrangement for the service under that basis,_ he proceeded to negotiate fer a Panama service under his general powers as Postmaster-General of the colony, and it is under these powers a"! denned by the " Post Office Act, 1858," that he now appears to have considered himself entitled to enter into the contract with the Inter-colonial Eoyal Mail Company. That Act empowers the Postmaster-General to enter into contracts for Postal' Services "under such instructions as he shall from time to time receive from the Governor." Fo instructions were given by the Governor other than those above quoted. It is clear, therefore, that Mr Ward had no power given him to enter into contract for^ services whicb were in excess of or antagonistic to the declared will of the Legislature.

This the company were fully aware of prior to their entering upon the contract; Mr Ward having laid all the above mentioned documents before the company's solicitor, who took the opinion of counsel on this very point, which was •unequivocally adverse to Mr Ward's possessing the necessary authority to bind the colony. In the following points the contract is in opposition to the declared views of the House.

(1.) The cost of the Panama service to the colony was limited by the act and resolutions of the House to L 30,000, whereas the contract proposes to bind the colony to a payment of L 63,000 for that portion of the service. It has been suggested that this latter sum might be reduced by cutting off the Otago and Melbourne and Sydney and Auckland Inter-colonial and all tie Interprovincial services save those provided for in the contract, but this would be in contravention of the 4tb and 6th resolutions of the House above quoted, and which it will be observed were of equal anthority with those at the same time passed in favor ot the Panama line. No doubt the colony would save a portion of the present contribution to the Suez line, and also gain the postages of letters by the Panama line j but these cannot reasonably be calculated at present at a larger sum than L 13,009, leaving an excess of Jj20,000 payable by the colony beyond the vote of the House. (2.) *The resolution of the House (No 2) pro•vided that the service should be so constructed as to confer advantages upoa and obtain the support of the neighboring colonies. Under the contract no colony save New Zealand would be in a position to have by that serv cc a four months' course of po3t, as the homeward steamers from Sydney would require to sail on the very day of the arrival of the outward steamer, thus conferring almost no postal advantage on the Australian Colonies. , „ (3.) The renewal of the Coleman Contract ot 1858, and the fixing an Inter-Provincial Service for five years, is ia direct opposition to the 7th resolution above quoted, as well as in opposition to the opinion of the House expressed in the Session of 1863 (which is binding on this Government, although unknown to Mr Ward when he entered into the contract)—that the Coleman Contract should be determined by notice in Octol>er next, and that all future Inter-Provincial Services should be for one year only. By the will of the Legislature, as above ex- ,

t ts nßßeeapwSig*«Vu«Mtllwwmi«ii.ii ■««■" ■■■«■' pressed this Government are as much bound as was Mr Ward ; and they Iwve no inherent power to bind the colony to a contract so greatly in excess of and in su(h decided opposition to the declared views of the Legislature. Did the Government feel themselves empowered to deal with the contract on its own merits, they would feel that tiiey bad a most difficult task to perform. The votes of the House and the voice of the co'ony have ever been propitious to the establishment of the line via Panama. There can be no question that the bringing of this colony into closer communication with Kngland, and also with those great states of America, North and South, whose growth will be co-iucident with ours whilot other States decay, would be a great benefit to this colony, though perhaps more in the future than at present. To New Zealand at least could be secured a four months' course of post; it would make New Zealand the nearest to England instead of the most distant of the Australasian colonies—and this at a rate confessedly lower than any previous proposal had dreamt of.

But. oq the other hand, the Government would feel that the cost, however reasonable, was t;O great for the colony in its present position alone to bear; that the colony could not afford to amputate all itslnter-eolonialand Inter-provincial steam services for the sake of Panama; that the colony could not afford to ignore the lessons of past history and experience by granting a monopoly for five years of the internal _ communicatons (for such are our inter-provincial steamers), of the colony. The cost of steam postal services to the colony, if the contract were adopted as it now stands, would be as follows :— Panama to New Zealand, per contract £63,090 New Zealand to New South Wales, as per Coleman contract renewed, and which, though temporarily payable by the Imperial Government, would evidently require to be paid by the colony after 1865 13,000 Inter-provincial services as pei contract 15,01)0 Additional for three contracts Intsr*piw incial services at 5s per mile over 5,000 statute miles per month, about 4,000 Two Inter-colonial services: Sydney and Nelson, and Melbourne and Otago, which, according to resolution of the House, must be retained 28,000 At least three additional Inter-provincial services, absolutely necessary at 5s per statute mile 19,800 £137,800 Deduct —Estimated saving from P. O. Receipts via Panama, and reduced contribution via, Suez, say 17,800 Total probable cost of steam services £1-20,000 This might perhaps be red need by the lower rats at which the inter-colonial services wouli hereafter be taken; but on the most favourable view, the cost would be considerably over LIOO.OOO per" annum. This certainly far exceeds anything hitherto contemplated by the House of Representatives. The provision at the end of the 7th clause of the contract is a very objectionable one, precluding as it does the sb»rtening of the periods of stay at ,the various ports in New 'Zealand, and thus stereotyping the trip from Auckland to Otagofor five years to a period often days. The 27th clause, however, is the most objectionable as giving the Company a monopoly of the whole subsidised steam service of the colony for five years. The clause is no doubt so expressed as to be peculiarly open to evasion; but the intention is clear, and could only be honorably fulfilled in practice by such a monopoly. This the Government could in no case sanction with their approval. Were the monopoly of the 27th clause waived, the inter-provincial time tables re-arranged, and the arrangements made so as to allow the colony of New South Wales the benefit of a four months' course or "post by the Panama route (in which event thai colony would no doubt contribute liberally towards the expense) the Government of New Zealand would be inclined to view the matter favorably. But in its present shape the Government would be assuming a power not belonging to it, as the Executive of the colony, were it to profess to give the contract validity by its sanction.

(Signed) W. Fox.