E.—3b

1873. NEW ZEALAND.

SAN FRANCISCO MAIL SERVICE, (FURTHER PAPERS RELATING TO). In continuation of Papers presented on 5th August, 1873.

Presented to both Houses of the General Assembly by command of His Excellency. No. 1. Mr. T. Russell to the Postmastee-Geneeal. Sic,— London, 11th July, 1873. I have the honor to submit the following report of my proceedings under the several authorities given to me as per margin : — ; Having sailed from Auckland in the "Nebraska" upon the 20th April, we reached Honolulu on tho Bth May. Immediately after my arrival I placed myself iv communication with the Hawaiian Government, aud found that for some months before they had ceased to pay Mr. Webb the monthly subsidy he had previously received from them, and that they were unwilling to make any money payments whatever to a new steam service between San Francisco and the Australasian Colonies. The Government alleged want of money ; but it became quite evident to me that they rely on the advantage of the port of Honolulu as a convenient coaling station, and believe they will be able to secure all the admitted benefits to them of the proposed steam service without having to pay in money for it. I urged every consideration that occurred to me, but failed to obtain anything more from the Government than the promises contained in the accompanying letter, dated May 9, 1873 (Enclosure No. 1). During my stay in Honolulu, several of the leading merchants, aware of this refusal to make a money contribution in support of a steam line, expressed their disapproval of the action taken by the Government, and their belief that it would be reversed. Upon arrival at San Francisco (19th May), I found that the telegrams expected from Australia had not arrived, and upon inquiry, it soon became clear that nothing in furtherance of our objects could be done in San Francisco. The leading bankers, merchants, and newspaper proprietors spoke warmly in favour of the service, and expressed their opinions that a subsidy for an American line would be granted at the next sitting of Congress, to take place in December. At San Francisco I learned of the disorganization of the affairs of the Pacific Mail Steam Company, and of the improbability of their being able to extend their steam service beyond Honolulu. I reached New York on Bth June, and remained there until 21st, during which time I made inquiry in every direction where I thought it probable proposals for our steam service would be entertained ; but I found that Mr. Webb's failure and his heavy losses prevented most steamship proprietors from considering the question of a renewal of the service. At New York also I was disappointed in not receiving telegraphic advices of the result of your proposals of co-operation made to the New South Wales and Victorian Governments. In the absence of direct information from Australia I telegraphed to Dr. Featherston, and he replied to me on, 11th June, that no contract had been made by New South Wales ; that they had voted £30,000 for the service; that Mr. Samuel had gone to New Zealand to solicit co-operation of New Zealand, and that he would arrive in London in July. Seeing that the New South Wales Government had despatched Mr. Samuel to New Zealand to confer with you, and considering the amount voted, £30,000, I inferred that they relied on our assistance, and hoped that your proposals to them to unite with New Zealand had been accepted. On the 14th June I sent you a telegram, as per Enclosure No. 2. During my inquiries in New York I found none willing to entertain a proposal for a service like Webb's, terminating in New Zealand ; and for any service extending beyond New Zealand to Australia, the amount asked was far beyond the amount I was authorized to pay by New Zealand, so that I had no alternative but to get proposals for a service embracing mail deliveries in Australia and New Zealand. General Burnside, representing several influential capitalists also, seemed willing to treat. Long negotiations followed, which are briefly embodied in the annexed letters:—(Enclosures, Nos. 3, 4, and 5.) Before leaving New York I sent you a telegram, as per Enclosure No. G. If the contract is made, the boats to be built are to be iron screw boats, with compound engine; the passenger accommodation fitted up on the main deck, according to the improved American plan; so that in the new ships the projectors propose to secure the durability, strength, and safety given by

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