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on behalf of the Government and Colony of New South "Wales, to protest against the alteration in the distribution of the postal revenues as proposed in the letter and communication above referred to, and also to express my hope that you may be able to obtain from Her Majesty's Government a reconsideration, and, if possible, a reversal, of the course indicated in the proposed alteration. 2. I am glad to understand, from the terms in which the proposal is conveyed, and especially from the circumstance of its being expressly initiated as a communication from the Lords Commissioners of the Treasury, that apparently Her Majesty's Government have not yet arrived at an absolute decision in the matter, but that the alteration is suggested rather as a course which Her Majesty's Government might possibly think fit to take in dealing with the ocean postal service between Great Britain and the colonies at the close of an existing contract, yet which Her Majesty's Government would not desire to take without due warning to, and opportunity for consideration by and remonstrance from, all parties concerned. It is, therefore, of course, still open to me, pursuant to my instructions, and in fulfilment of the duties of my office, as well as for any other of the parties directly or i2idirectly concerned, to submit for your information and consideration whatever suggestions or objections they may have to offer in opposition to the proposal in question. 3. I have, accordingly, the honour to submit: Ist, that the proposed alteration in fact amounts to a practical withdrawal on the part of Her Majesty's Government from the general arrangement for ocean steam postal services between Great Britain and the colonies, such ns the colonies and other parties to such arrangement had no reason to contemplate; 2nd, that the course indicated by the proposed alteration is inconsistent with the principles involved in the existing arrangement, as well as of such arrangements generally, and which have been virtually assented to and recognized by Her Majesty's Government on entering into such arrangements ; and, 3rd, that it is not only unfair to the colonies, but calculated to be injurious to their interests and to those of the empire generally. 4. (Ist.) As the proposed alteration now stands in their Lordships' communication, taking into consideration and making due allowance for the progressive reduction in the cost of carriage of letters and packages, both by land and sea, as an element in future calculations, there are good grounds for anticipating that in a year or two Her Majesty's Government, would, under the proposed alteration, all else remaining as it is, be actually drawing a surplus revenue. I prefer, however, not allowing myself to suppose that any idea so unworthy of, or inconsistent with, Imperial policy and functions, as that of making a profit out of such a transaction, and drawing a surplus revenue for Great Britain from her Imperial connection with her dependent colonies, could for a moment have been entertained or contemplated by Her Majesty's Ministers in proposing such an alteration. I content myself, therefore, with stating the obvious fact that, to say the least, the result of the proposed alteration will be to fully reimburse the Imperial Treasury for her expenses under the existing arrangement, other things remaining as before. This appears to me, as I have already above suggested, to amount to nothing more or less than a practical withdrawal of Her Majesty's Government, not only from the existing arrangement, but from all such arrangements in future, for ocean steam postal services between Great Britain and the colonies. Indeed it is not easy to conceive how, in proposing such an alteration, either the Lords of the Treasury or Her Majesty's Government can imagine themselves to be parties to such an arrangement at all, or to intend retaining, or to retain, any mutuality in the ocean steam postal services. If Great Britain insist on either making a profit or on reimbursing herself for her expenses out of the proceeds or revenues of these services, might not the colonies as well carry on the services for themselves from both ends without Imperial assistance or co-operation, except, perhaps, that merely nominal assent which would consist simply in not objecting or throwing obstacles in the way —a sort of co-operation which could not be refused, but which would be of very little substantial value, and for which, therefore, the colonies could have no reason to be grateful ? This sort of co-operation is always readily obtained from foreign governments, and might easily be obtained from the Government of the United States. And, after all, if pecuniary assistance or contribution be withheld, what benefit are the colonies to derive from, or what does Her Majesty's Government expect to confer by, the assistance or co-operation of the mother-country in such undertakings ? 5. (2nd.) It seems to me still more manifest that the proposed alteration is utterly inconsistent with the principles involved in the existing arrangements for ocean steam postal services, and which were virtually assented to and recognized by Her Majesty's Government from the very fact of their having entered into such arrangements. These arrangements were never instituted or entered into with any expectation or intention that they would or could be either profitable or self-supporting. They obviously and necessarily, in their very inception, implied mutual sacrifices on the part of all and every one of the parties concerned, sacrifices which were understood and freely accepted by the colonies and Great Britain, for the benefit, not only of themselves, but of the Empire at large, and which were supposed to be equally so understood and accepted by Her Majesty's Government, not, certainly, for the benefit of any single colony or locality, much less of Great Britain herself considered as an individual section and component part of the Empire. Indeed, from the Imperial position held by Great Britain, it was always supposed that she was prepared to undergo a proportionate, if not a greater, sacrifice than was required from the other parties —proportionate not only to her share of the benefits, but to the duties that position appeared to impose upon her as trustee and guardian of general interests. It is plain, that, by insisting on complete reimbursement for her expenses, she abandons those principles, descends from the high standard of policy she has hitherto maintained in the matter of ocean steam postal services, and abrogates pro tanto her Imperial position and functions, in the spirit rather of a trader who refuses to engage in an undertaking or investment until he has, if not assured himself of profit, at least secured himself against the risk of pecuniary loss, than of an Imperial trustee and guardian of great national and general interests. 6. (3rd.) If the above views be correct, it seems easily and necessarily to follow that the proposed alteration is unfair to the other parties concerned in the existing arrangements for ocean steam postal services,and that it must operate injuriously to the interests of the colonies and of the Empire generally. That some understanding of the sort of principles, such as I have assumed to have been mutually assented to and recognized by the parties to existing arrangements, must have been present to the minds of all those