E.—3.

In my statement to the Colonial Conference on the 27th April I mentioned that the proposal of the Pacific Telegraph Company, which was then before the Conference, for an annual subsidy of £100,000 for twenty-five years was based upon calculations as to the approximate cost of constructing and laying a cable which were made some time ago. I further stated that the company was at that very time actively engaged in collecting expert evidence as to the most recent improvements in the manufacture of cables, and the consequent reduction in the cost of constructing and laying them. The result of investigation has been to convince the directors that the original estimate for the cost of the undertaking will bear some reduction. In addition to the above, the directors have been influenced by considerations of even greater weight. Events of very recent date point to the certainty of the Pacific Ocean being shortly developed as one of the main waterways of the world's commerce. In view of the very largely increased intercolonial telegraphic traffic which must inevitably follow any such development, the directors feel justified in accepting the extra risk which the reduction of the guarantee from £100,000 to £75,000 per annum will entail. As above stated (in clause 5), the directors of the Pacific Telegraph Company bind themselves to start by reducing the rate to 4s. per word for the transmission of ordinary messages from England to Australasia, and further bind themselves not to exceed such rate. The reduction to 4s. per word, however, is by no means intended to be final, for, if the estimates of increased traffic are in any way realised, the company will be in a position to effect very considerable further reductions. I have, &c, The Chairman, Colonial Conference, London. Haeold Einch Hatton.

No. 2. Dr. Lemon to the Seceetaey, Pacific Telegraph Company, Limited, London. Sic,— General Post Office, Wellington, 30th June, 1887. I have the honour, by direction of the Hon. the Postmaster-General, to acknowledge the receipt of your letter of the 13th ultimo, forwarding a copy of the one you addressed to the Chairman of the Colonial Conference on the 3rd idem, embodying the amended proposals of your company, in which the sum of £75,000 appears as the contribution to be collected from the Governments of Great Britain, of Canada, and of the Australasian Colonies towards the maintenance of the cable to be laid between Vancouver Island and Australia. I have, &c, The Secretary, Pacific Telegraph Company, Limited, C. Lemon, 34, Clements Lane, London, E.G. Superintendent. [Approximate Cost of Paper.— Preparation, nil; printing (1,425 copies), £1 18. 6a..]

Authority: Geougb Didsbuet, Government Printer, Wellington.—lBB7.

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