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No. 38. Mr. J. Mills to the Secretary, General Post Office, Wellington. Union Steamship Company of New Zealand (Limited), Sir, — ' Dunedin, 21st November, 1889. In reply to your favour of the 4th instant, I have the honour to advise you that the directors are agreeable to continue the interprovincial services in connection with the San Francisco and Direct mail contracts for a further period of twelve months on the terms stated — viz., £3,500 per annum for the interprovincial San Francisco service, and £3,000 per annum for the interprovincial Direct mail-service, it being agreed that whenever the inward San Francisco mail reaches Auckland so late as to prevent the Manukau steamer bringing the southern portion of it on to Wellington and returning in time for the outward Direct mail, the San Francisco mail shall be conveyed to New Plymouth, the Postal Department providing for its transit to Wellington by rail. I have, &c„ James Mills, W. Gray, Esq., Secretary, General Post Office, Wellington. Managing Director.

No. 39. The Agent-General to the Hon. the Postmaster-General, Wellington. Westminster Chambers, 13, Victoria Street, London, S.W., SlE,— 17th October, 1889. In continuation of my letter of 18th September, I have to report that the Lords Connnismissioners of Her Majesty's Treasury have consented to extend the existing arrangements relating to the transit of the San Francisco mails between London and San Francisco for another year, to November, 1890, but stipulate that if the apportionment of postage should be eventually readjusted on terms more favourable to the London Post Office, the new apportionment shall date back to November, 1889. Enclosed is copy of the London Post Office letter to me notifying the assent of the Treasury, together with my reply, in which I have pointed out the inexpediency of complicating matters bysuch a stipulation, and proposed to leave the question of apportionment to be settled hereafter as part of the general subject of a Pacific mail-service. Immediately after the Treasury had come to their decision, the Agent-General for New South Wales received a telegram from his Government instructing him to co-operate with me in the negotiations with Her Majesty's Government. We shall therefore have the advantage of acting in concert in any future steps with the Imperial Post Office and Treasury. I telegraphed to you on the 7th instant informing you of the Treasury consent, and a copy of my message is annexed. I have, fee., The Hon. the Postmaster-General, Wellington. F. D. Bell.

Enclosure 1 in No. 39. Mr. Tumor to the Agent-General, London. Sir, — General Post Office, London, sth October, 1889. The Postmaster-General has brought under the consideration of the Lords Commissioners of Her Majesty's Treasury your letter of the 4th September, stating that your Government and that of New South Wales propose to renew their contract for the mail-service between San Francisco and Sydney via New Zealand for another year from November next, and asking whether Her Majesty's Government will consent to extend for that period the existing method for apportioning the cost of the service. You state that this arrangement is proposed for the purpose of enabling the Colonial Governments to mature schemes for the substitution of some other mail-route, probably by way of Vancouver, for that of San Francisco. I am now directed to acquaint you that the Lords of the Treasury concur with the PostmasterGeneral in the view that the case is governed by those considerations which induced their Lordships to give their assent to the similar proposal put before them last year. But lam to point out that there is strong reason for the opinion that the cost of the service is at present unfairly apportioned, and presses unduly upon this country. Although entitled to look for a rearrangement of the apportionment upon better terms to this country, the Treasury last year consented, at the request of the New Zealand Government, to extend the existing arrangement for one year, in the expectation that by the present time matters would be in a position to facilitate a rearrangement upon more equitable terms. Their Lordships would therefore now be justified in asking that a new apportionment should be at once undertaken. But they are most unwilling to take any steps which might prejudice the results of the Postal Conference in Australia, and they therefore consent to the extension of the present arrangement for another year. I am to state, however, that, in consenting to this extension, the Treasury stipulate that if, as the result of inquiry, the apportionment is eventually readjusted on terms more favourable to this country, the new apportionment shall date from the expiry of the present arrangement in November, 1889, so that theTmperial Exchequer may not be prejudiced by the extension made to suit the arrangements of the New Zealand Government at their own request. - I am, &c, Sir Francis D. Bell, K.C.M.G., C.8., &c. Algernon Tumor.