I).—No. l

formance of the Panama, New Zealand,- and Sydney Alail Service, as well as the Inter-Provincial Services, on the terms and conditions specified ; but that you are unable to accept that portion of the tender which relates to the Auckland and Sydney line. Having laid the matter before the Board, I am authorised to inform you in reply, that the stipulation relating to the Auckland and Sydney Service to which you make objection will be withdrawn, and therefore clauses Nos. 1, 2, and 3, of the Division No. 3, mentioned in the tender, will be cancelled. The Directors, however, are glad to receive the expression of your opinion, that it is not unlikely the General Government may eventually decide upon maintaining the service in question, and possibly a second Inter-Colonial line, for the performance of which it is assumed that the vessels of this Company would be subsidized in preference to those belonging to other parties. Instead of requiring seven days for the passage between Sydney and AVellington, the Directors would undertake that the vessel should reach the latter port seven days after her arrival at the former one, and leave Wellington seven days after her departure from Sydney, the Company being at liberty to detain the ship at Wellington for any period not exceeding 48 hours. It is presumed that AVellington will be selected as the port of call in New Zealand. The Board are disposed to give the preference to Auckland, but they leave tho matter entirely in your hands. I have also to state that, if you should desire it, the Board will undertake that the Service between Sydney, New Zealand, and Panama shall commence from Panama the same month as from Sydney, instead of one month later, as at first contemplated; the full subsidy being payable from the date of the commencement of the service, which it is proposed shall be Ist Alarch, 1865, instead of Ist January. The Board are also prepared to amend clause 4 of division No. 2, by adding the words " and horse-power" after "larger dimensions," and it is understood that the fourth vessel to be provided for the Panama line will be of the same power and capacity as the other three boats. I may mention, also, that it is not unlikely that the fourth vessel will be ready within six months after the others, as the Directors are of opinion that in order to secure the efficient working of the line, and to be prepared for contingencies, it is desirable it should be on the station as early as possible. The Board are likewise willing to reduce the maximum charge for Ist class passengers between Wellington and Panama to £55, and to stipulate that the through rate to Svdney shall not exceed £65. I have only further to add that as the Directors now regard the agreement for the new contract as virtually settled, it is their intention to proceed at once with all the necessary arrangements for carrying it out. I have, Ac, Claud Hamilton, Chairman. The Honourable Crosbie AVard, Esq.,Postmaster-General of New Zealand, Adelaide Place, London Bridge. No. 46. Inter-Colonial Royal Alail Steam Packet Company (Limited), Offices, 41, Moorgate Street, London, E.C., November 18th, 1863. Aly Dear Sir, — I beg to thank you for your kind letters of the 13th and 14th inst. The suggestion you make is certainly worthy of careful consideration. I called at your office this morning, and left a letter from the Board agreeing to all the proposed modifications. It has been decided to dispense with any formal ratification on the part of the shareholders. We shall inform them in the report we intend issuing to-morrow, preparatory to our halfyearly general meeting, that the arrangement has been concluded for the Panama service. AVe shall be prepared to sign the contract as soon as ever it is ready. Our solicitors are Alessrs Cunliffe and Beaumont of Chancery Lane. They are well known to Mr Ashurst, the Solicitor to the Post Office. I have, Ac, James WcTrley. The Honourable Crosbie Ward, Esq. No. 47. London, 19th November, 1863. Aly Lord, — I have the honor to acknowledge the receipt of your Lordship's letter of the 18th inst., in which you inform me that the Board of Directors of the Inter-Colonial Royal Alail Steam Packet Company are willing to withdraw the stipulation relating to the Auckland and Sydneyservice contained in clauses 1, 2, and 3, of subdivision No. 3, of their Tender for the Panama, New Zealand, and Sydney Alail Line, and the Inter-Colonial and Inter-Provincial Steam Services. I have the honor accordingly to state that I accept the present Tender on behalf of the Government of New Zealand.

31

ESTABLISHMENT OF A PANAMA MAIL SERVICE.