D.—No. 1

it stands for consideration by the Colonial Government, who, upon consultation with some of the Australian Colonies, may possibly find themselves in a position to accept it. I have, Ac, Crosbie Ward. The Right Honourable Lord Claud Hamilton, M.P., Chairman, 1.C.R,A1. Company, 41, Aloorgate Street, London, E.G. No. 42.. Inter-Colonial Royal Alail Steam Packet Company (Limited), Offices, 41 Aloorgate Street, London, E.G., November 4th, 1863. Mr Dear Sir, — I had the pleasure to receive this morning your favour of the 2nd inst. enclosing an official communication re Panama line. The Board meeting to which I alluded will be held immediately after the arrival of the Alail via Marseilles. As most of the directors are now away in the country, I fear I shall not be able to do any thing before the meeting; but I don't hesitate to express the opinion that a satisfactory arrange-" ment will be come to. J & I have, Ac., P.S.—The ' Otago ' leaves Gravesend for Sydney to-morrow morning.—J. AV. The Honourable Crosbie Ward, Esq. _ „ ( No. 43. Treasury Chambers, 7th November, 1863. Sir, — I am directed by the Lords Commissioners of Her Alajesty's Treasury, to acquaint von that my Lords have had under their consideration your letters of tho 15th August and 2nd Sen tember last, relative to the proposed establishment of a Alail Service between New Zealand and Panama, at the sole cost of the Government of New Zealand. With regard to your enquiry as to whether it may not be " advisable for the public service that the negotiations tor the Service should be entered into, and the contract effected by or through Her Majesty's Postmaster-General, the guarantee of the colony being taken for the whole subsidv" lam to state, that my Lords having communicated with the Postmaster-General on the subject his Lordship has intimated that the Post Office authorities will be readv to assist you in any war vou may think desirable in carrrying on the preliminary negotiations for the service in question • but Lord Stanley of Alderley is of opinion, in which opinion my Lords concur, that it would be better that any contract should be entered into directly by the New Zealand Government the more especially as tho Post Office authorities of that colony are in a better position than the British Post Office for superintending the Service. With respect to the apportionment of the postage levied on the correspondence sent by the proposed route, so long as the whole rate of postage is 6d. per $ ounce letter, 4d. of that sum must be considered the portion levied for the sea conveyance, and 2d. the Imperial and Colonial inland rates. If the whole postage be hereafter increased to Is. per | ounce letter, as has been under consideration, and has already been carried into effect with regard to the postage on letters forwarded by the contract packets to the West India Colonies and the Cape of Good Hope lOd of the postage of Is. the \ ounce may be considered as sea postage. ' AVith regard to the sea postage, therefore, as all letters, newspapers, Ac, sent by way of Panama will have to be conveyed between this country and Colon by the packets subsidized bv the Home Government, the British Post Office has an equitable claim to a share thereof- but with the view of rendering assistance to New Zealand, should the proposed packet communication be estab lished, my Lords would be prepared to authorise the Postmaster-General, at the outset tempo rarily to waive the claim of the Imperial Post Office on account of such sea postage. ' My Lords, however, would desire it to be understood that they are at liberty-' at any time to discontinue this privilege, and to require payment for the service to be rendered, if it appear to them expedient so to do. *' With respect to the enquiry in your letter of the 2nd inst., as to whether, in the event of the contemplated service proving efficient, and the Government of New Zealand determining- to put an end to the contract for the existing branch service between Sydney and New Zealand Her Majesty's Government would be willing during the period which that contract has yet to run to .apply towards the cost of the new service the annual contribution of £13,000 now made from Imperial funds in aid of the subsidy for the Branch Service, I am to state that my Lords are not prepared to comply with this request. The contract for this service can be determined in November 1865, provided notice be given twelve months previously, and it appears to my Lords

29

ESTABLISHMENT OF A PANAMA MAIL SERVICE.