E.—3

34

are or ought to be observed, performed, fulfilled, and kept in such manner in all respects as in the said articles of agreement are mentioned or required; and if the said Hayden Hezekiah Hall, his executors or administrators do and shall well and truly pay to the said Postmaster-General all fines, forfeitures penalties, damages, liquidated or ascertained, damages, sum and sums of money, which shall or may from time to time, and at any time hereafter, become payable from or by the said Hayden Hezekiah Hall to the said Postmaster-General, under or by virtue of the said articles of agreement, when and as such fines, forfeitures, damages, liquidated or ascertained damages, sum and sums of money shall respectively become and be payable, without any deduction or abatement on any account whatsoever, then this obligation to become void, otherwise to be and remain in full force and virtue. (1.5.) H. H. Hall, (1.5.) Wm. Cameron, (1.5.) Jos. B. Dunn. Signed, sealed, and delivered by the said Hayden Hezekiah Hall, William Cameron, and Joseph Bragg Dunn —the words " and from the said port of San Francisco to the port of Sydney aforesaid," having been previously written between the third and fourth lines from the foot of the first page hereof, in the presence of John Williams, Solicitor, Sydney. T. K. Bowden, Solicitor for Contractor.

No. 53. The Hon. Saul Samuel to the Hon. J. Vogel. Sir,— Wellington, 4th June, 1873. Eeferring to my letter to you of yesterday on the subject of the establishment of a Mail Service via San Francisco, I desire to state that, in consequence of some doubt having been expressed by you as to the ability of the contractor to carry out the service, I am willing to act in concert with your representative in England; and that, should the contractor fail to satisfy us of his ability to perform the conditions of the contract, I undertake to adopt measures to cancel the same, and to arrange with your representative for another contract with other parties, based on the same terms and conditions. I would also again point out to you the advantageous character of this service to your Colony, giving it a speedy and efficient mail service with the TJnited Kingdom at a cost, in the first instance, of £25,000, which sum, it may reasonably be expected, will be reduced by subsidies from Great Britain and other places to at least one-half that amount, say, £12,500. I have, &c, The Hon. Julius Vogel, C.M.G., Wellington. Saul Samuel.

No. 50 of this series.

No. 54. The Hon. J. Vogel to the Hon. Saul Samuel. Sib,— General Post Office, Wellington, 4th June, 1873. I have brought under the notice of the Cabinet the proposals in reference to a Californian Service which you made to mo verbally yesterday, together with the copy of the contract and bond which you left with me. After these were well considered, your two letters were received, and were also taken into consideration. I have to express the regret which is felt by the Cabinet that your Government should have entered into a contract for such a service without first consulting the Government of New Zealand, with the view of devising terms which might have led to hearty co-operation. The resolution which was passed on the subject of the service by the late Intercolonial Conference expressly contemplated the two Governments jointly arranging a contract. In correspondence on the subject, your Government have expressed a desire, supposing the Webb-Holladay Contract should be terminated, to act in concurrence with New Zealand. To a deputation from the Sydney Chamber of Commerce, and subsequently in the Legislature, members of your Government gave assurances of a like desire. Yet your Government have, without reference to the Government of this Colony, entered into a contract of so hurried a nature that all those provisions which would tend to give security to New Zealand—supposing the Colony to join with you in the contract—are omitted. I have stated to my colleagues your assurance that you would compel the contractor to assent to such provisions, should an agreement with New Zealand be come to; but the fact remains that the contract does not, at present, include the provisions which would be obviously necessary to justify this Colony to contribute to the service. There is no adequate provision for the nature of the vessel to do the branch service between Kandavau and New Zealand, for the speed to be adopted, and the penalties for delays, nor for the detention of the main steamer if the branch steamer fail to arrive at Kandavau in time, nor for the passage of a Mail Agent. In brief, you propose that New Zealand should pay five-twelfths of the cost of a service, in the contract for which its interests are wholly neglected. Supposing you are able to remedy these defects, you would be able to insist on another contract, and it then would be better to

Nos. 50 and 53 of this series.