3

P.—3d

The present service cannot be made one of profit if performed in a manner that will give perfect satisfaction to passengers. The risk of navigating the Fiji group is so great in consequence of an almost entire absence of. lights, that it is condemed by underwriters and seamen. In the words of one of the latter, " Shouli one of these large steamers be caught in a hurricane in the Fijian group, a terrible disaster might result." We are required to furnish a class of vessels that will not, without great risk, enter harbours at which we are required to deliver the mails. The impossibility of conducting the service from points so widely distant, without there often times occurring a want of proper connection, causing inconvenience and delay to passengers, and expense and loss of mail pay to Contractors. As we understand the case from your letters, from conversations with the representatives from both colonies, and from the spirit of the Colonial Press, there is no question of the change being popular with all classes and conditions, and being open to objections from no one. This being the case, and in view of the great risk the Contractors run, and the large expense entailed upon them by the present route, we feel that it is hardly just to us for the officials to move so slowly in a matter of such vital importance. We enclose you copy of cablegrams sent in relation to this subject, July 11th, and which we sent also by the " Australia," and beg that you will place the matter in such a light before the Hon. Post-masters-General as to induce a prompt reply. Very respectfully yours, J. B. Hotjston, Messrs. Gilchrist, Watt, aud Co., Sydney. Second Vice-President. N. 8.—1 write you this in order to insure catching the " San Francisco," but the President will return on Tuesday, and will doubtless also write to you on the same subject, as he feels very much chagrined that the Colonial officials have apparently taken little interest in meeting this Company in their efforts to perform a service that, while it will give satisfaction to the colonies, will not entail a heavy loss upon us. We can with safety assert that, with a few alterations about to be made in the vessels, to adapt them more fully to the peculiar service, it will be the finest sea route in the world; and of course we desire to see some evidence that our efforts are appreciated.

Enclosure 2 in No. 8. Mr. W. P. Clyde to Messrs. Gilchbist, "Watt, and Co., Sydney. Office of Pacific Mail Steamship Company, No. 6, Bowling Green, Gentlemen, — New York, Bth August, 1876. I will add to what Mr. Houston has already written you by this mail, that the difference which had arisen between the former management of this Company and the Colonial Governments, respecting the contract which had been entered into between them, had left such a prejudice against the service, that there was a very strong disposition in the new direction to discontinue the service forthwith. This I opposed, as I have very fully explained to your Mr. Watt, whom I had the pleasure of meeting here on his way to England. My opposition was based upon the conviction that the Colonial Governments had established this service in good faith, with a desire which was shared, as I believed—and in this belief I have been confirmed by Mr. Watts' statements—by the merchants and people of the colonies, to make it a permanent and prominent route between the colonies, our country, and the Home Government. The many advantages which the route presents rendered this view of the case reasonable. The situation appeared to be that a contract had been entered into for the performance of a service which was impracticable, and which appears to have been so regarded by the underwriters and best informed merchants of your colonies ; and condemned, when it was made, by the naval officers and seamen of both your own and our country as unsafe. Under the former direction of this Company, an abandonment of this service had been seriously considered, when a modification of the route to the direct C service was permitted, and the service continued. The necessities of the case present to my mind the following alternatives: — A modification of the route to what is known as the C route, which avoids the difficulties and dangers of the coastal service and the stopping at Fiji. The substitution of ships fitted for the coastal service and Fiji navigation, which steamers would scarcely be fit for the long sea service, in place of the popular and able steamers now performing the service. Otherwise an abandonment of the service. With every desire to meet the Colonial Governments with perfect fairness, assuming, as before stated, that it is their wish to make this a permanent route, and that it is evident to them that, in order to accomplish this, this service must be, as far as possible, both safe to the travelling public and reasonably profitable to the Contractors, the interests of the Company will compel me to make an early decision as to which of the alternatives it must accept. Consideration for the safety of life and property it would seem should alone have the necessary influence to induce a reasonable change, added to which is the consideration before alluded to, that if the route is to be maintained as a permanent and growing one, it would not be expected that any Government would desire to retain any technical advantages which it might have secured in a negotiation with parties desiring to treat them honorably, through want of knowledge or experience in the service proposed on the part of parties entering into the contract. Considerations so illiberal and narrow as this would be inconsistent with the development of any enterprise of such public importance as this seems to promise. The case strikes me as so reasonable, and the expressions of approbation of the change are so universal upon the part of all the citizens of