F. — Q.

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the general ground that the new service is an advantageous one to establish, and should therefore be encouraged, so far as possible, by the Imperial authorities. It has been, however, pointed out that the letters, &c, sent to New Zealand by the Eastern route in the weeks intervening between the despatch of the San Francisco and Vancouver mails would probably reach their destination earlier than if they were kept back to go by either of the latter routes. Moreover, the sending of the mails by either San Francisco or Vancouver would involve the Imperial Government in an expenditure of probably £3,000 or £4,000 per annum, whereas, if the mails went by the Eastern route, any such extra expenditure on the part of the Imperial Government would be avoided. I have, on the other hand, pointed out that there is no regular mail-service between Australia and New Zealand, and that therefore there is no certainty as to the time the mails would reach the latter colony ; and this fact I represented outweighed any advantage likely to arise from the mails being despatched by the Eastern route. With regard to the payment of the Postal Union sea-rates, the position, as I understand it, taken up by the Imperial Post Office is that the line of steamers by which the New Zealand mails will be carried from and to Vancouver was in the first place established by a subsidy from Canada, while the mail-service now contracted for with the New Zealand Government can only be regarded as a loop-line or branch of the main service, and that therefore the question as to how the sea-rates shall be apportioned is one that should be the subject of arrangement between the two colonies who are supporting the service by subsidy or otherwise. I shall take every opportunity of pressing upon the Imperial Post Office the Government's claim that the sea-rates for the New Zealand outward mails shall be paid to the New Zealand Post Office. At the same time I cannot help thinking that the Imperial Post Office are not very likely to withdraw from the position they have taken up, and that they will persist in requiring Canada's concurrence before paying the sea-rates to New Zealand. I accordingly ventured to suggest to you in my cablegrams of the 10th and 17th instant that you should confer direct with the Government at Ottawa with respect to the matter, or authorise me to do so. In addition to the correspondence between the General Post Office and myself, I transmit copy of letter which I have this day received from the Colonial Office, enclosing copy of letter (dated 10th December last) from the General Post Office. With regard to the proceedings now being taken to wind up the Canadian-Australian Eoyal Mail Steamship Company, I am informed on good authority that these proceedings will not interfere with the mail-service which that company has contracted to carry on between New Zealand and Vancouver, and you will see that, in reply to the Imperial Post Office's inquiry with respect to these proceedings, I have made a statement to that effect. I have, &c, The Hon. the Premier, Wellington. W. P. Beeves.

Enclosure 1 in No. 131. The Secretaky to the Agent-Genebal to the Seceetaey, General Post Office, London. Sib,— 13, Victoria Street, London, S.W., 22nd December, 1897. I am directed by the Agent-General to acknowledge the receipt of your letter of the 9th instant [see Enclosure 2in No. 121], by which it is understood that full Postal Union sea-rates for the conveyance of mails between Vancouver and New Zealand will, in case the New Zealand Government subsidise such service, be paid by your department to the Post Office of New Zealand. I must add that the Agent-General is not at present in possession of any information as regards any arrangement to the contrary between the Canadian and New Zealand Governments. I am, &c, Walter Kennaway. The Secretary to the General Post Office, St. Martin's-le-Grand.

Enclosure 2 in No. 131. The Seceetaey, General Post Office, London, to the Seceetaey to the Agent-Geneeal. Sib,— General Post Office, St. Martin's-le-Grand, 7th January, 1898. With reference to our interview of yesterday, I beg leave to inform you that the letter from your office of the 22nd of last month, to which you referred, has now been found. I regret to find that it was mislaid after its due receipt here, and the more so because it is evident from its terms that the meaning of the letter from this office of the 9th ultimo has been misinterpreted. The statement that " the same course would be applicable in the case of any mails for New Zealand which might be forwarded by che Canadian-Australian line," as in the case of correspondence for Fiji and Australia already sent hence via Vancouver, was intended to be taken quite literally ; and, as it was explained that in the already existing case the payment for land and sea transit is made to the Canadian Post Office, I am at a loss to understand how the words could be taken as meaning that payment in respect of such transits would, in regard to correspondence for New Zealand, be made to the New Zealand Post Office. As clearly implied in the last paragraph but one of my previous letter any departure from the arrangement mentioned above would be a subject on which the New Zealand Government would have to come to terms with that of Canada, as the colony primarily subsidising the line of packets concerned.