F.—3C

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I explained that I had no power to bind either Governments, or in any way condone the delay; but if the steamer were started, I would recommend that the fines bo remitted; and I now strongly recommend you to do as this Government has done, remit the amount. I shall take it as a compliment to myself, and an encouragement to do all I can on my way back to do whatever is in my power to make the contract run smoothly. The orders for the captain to keep the ship to eleven knots are contained in the general orders given to each captain each voyage, and it was not a special order to the captain on the voyage alluded to; and this point may, I think, be fairly set aside. I have, &c, The Hon. Sir Julius Vogel, Wellington. Daniel Coopee. P.S.—This Government has, yesterday, with my advice, settled all outstanding matters with the contractors, as follows : — £ s. d. "Vasco de Gama" (inwards), coming to station ... ... ... No payment. "Vasco de Gamo" (outwards), two-thirds ... ... ... ... 1,029 0 0 " Colima," broke down ... ... ... ... ... ... No payment. "City of San Francisco" (inwards) ... .:. ... ... 1,729 16 2 " City of San Francisco " (outwards) ... ... ... ... Paid in full. "Granada" (inwards) ... ... ... ... ... ... Paid in full. " Granada" (outwards) ... ... ... ... ... ... Paid in full. " City of San Francisco," second voyage (inwards and outwards) ... Paid in full. " City of New York," second voyage (inwards and outwards) ... ... Paid in full.

No. 23. The Hon. Sir J. Vogel to Sir Daniel Coopee, Bart. Sydney. Sir,— General Post Office, Wellington, 15th July, 1876. I am in receipt of your letter of the 3rd instant, and, in accordance with your recommendation, I have directed that the £500 penalty, deducted on account of the late departure of the " City of San Francisco" from San Francisco in April last, be refunded the contractors forthwith. I have, &c. y Sir Daniel Cooper, Bart., Sydney. Julius Vogel.

No. M. The Hon. Sir J. Vogel to Messrs. Gilciimst, Watt, and Co., Sydney. Gentlemen, — General Post Office, Wellington, 15th July, 1876. By the mail just received from Sydney, I am in receipt of a communication from Sir Daniel Cooper, Bart., in which he urges the remittance of the penalty on account of the late sailing of the " City of San Francisco " from San Francisco in April last. In consequence of Sir Daniel Cooper's recommendation, the Government are willing to remit the penalty, and the amount will be paid you forthwith. 2. It would appear you are under the belief that the sum of £550 has been deducted for the late sailing of the "'City of San Francisco." This is not the case, as the department was empowered by the terms of the contract to deduct only £500. The additional £50 represents the bonus paid by this department for expediting the delivery of the " City of San Francisco's " mails along the coast, so as to admit of replies being forwarded by the " Colima." The department had to enter into such an arrangement, as your Auckland Agents failed to stipulate that the mails should be delivered at Port Chalmers with all possible speed. I have been in correspondence with Mr. Driver on this matter; and no doubt he will have apprised you of the action of this department, and that it was rendered necessary through the imperfect arrangement made by your Auckland Agents. I have, &c., Messrs. Gilchrist, Watt, and Co., Sydney. Julius Vogel.

No. 25. Messrs. G-ilchbist, "Watt, and Co., Sydney, to the Hon. the Postmaster-General, Wellington. Sir,— Sydney, 3rd July, 1876. On the 27th ultimo we had the honor to receive your favour of the •'ith of June. "We have to day seen Sir Daniel Cooper, and he advises us that he has written to you, recommending that the full amount of subsidy bo paid for the conveyance of the mails per " City of San Francisco" on her last voyage from San Francisco to Auckland. 2. "We hope, therefore, you will refund the £550 you have deducted as penalty, and advise us forthwith by wire when you lodge the same, as communication by letter between our two colonies is so irregular and tardy. 3. In future, we will comply with your request, and send copies of any correspondence between the Government and ourselves to which it may be necessary for us to make reference. 4. We thank you for your promise to pay the subsidies as promptly as possible after the arrival of each steamer at San Francisco and New Zealand, leaving adjustment of bonus or penalty for subsequent settlement. 5. As regards cablegraph information, we may state that this Government has authorized the Pacific Mail Steamship Company to wire through us all arrivals and departures at once, and has under-

F. 3, No. 195.