F.—l

XVI

Negotiations have been in progress for some time between this colony, the Commonwealth, and Canada, with the object of the service embracing New Zealand. The Queensland Government was desirous of withdrawing, and New Zealand was prepared to take her place and pay £20,000 a year if Brisbane were omitted and the steamers called at Auckland or Wellington at the contractors' option. The Commonwealth Government was agreeable, but Canada was not favourable to the change, although there was reason to suppose that consent would eventually be given. Within the last few weeks the position has assumed an entirely new phase, as the Queensland Government has intimated that it will not be adverse to the continuation of the service provided the subsidy of £10,000 a year is paid by the Commonwealth, as in the case of other mail subsidies, and not by Queensland alone. It is probable that the Federal Government will agree to this, and, if so, New Zealand will thus be effectually shut out, as the service could not take in Brisbane as a calling-place as well as a New Zealand port. The outlook, so far as New Zealand is concerned, in the direction of diverting the service, is now anything but encouraging. At one time there was every prospect of the colony securing it. Further efforts, however, will be made to get the steamers to call at New Zealand. Suez Services. The Federal mail-services performed under contract by the Peninsular and Oriental and the Orient steamship companies between the United Kingdom and Australia expired in January last. The Imperial Government renewed a contract with the Peninsular and Oriental Company for a fortnightly despatch to Australia; but the Commonwealth Government was unable immediately to arrange for the alternating fortnightly service from Australia with either the Orient Company or any other, and for a time forwarded mail-matter at the minimum poundage rates. The Federal Government, however, eventually succeeded in making a contract with the Orient Company as from the 11th and 16th April from Sydney and Naples respectively. The service, which is fortnightly (providing a weekly despatch), is for a 696-hours service for £120,000 a year (against a 662-hours service by the Peninsular and Oriental steamers), and has to be ratified by the Commonwealth Parliament. The contract is operative until January, 1908. The uncertainty of re-establishing a regular weekly contract service between Great Britain and Australia vid Suez resulted in much larger use being made of the San Francisco service for a time. The "Sierra" left San Francisco on the 18th March last with 1,878 bags of mail for all ports, the largest mail despatched by a contract steamer in the San Francisco service; of these, 900 bags were for Australia. As the result of personal discussions in Melbourne in April last between the PostmasterGeneral of New Zealand and the Commonwealth Postmaster-General, there is a probability of the Commonwealth making increased payments to the San Francisco service, and this colony securing the use of the Federal services at Postal Union rates. New Zealand paid the Commonwealth 12s. per pound for letters, Is. 6d. per pound for books, and 6d. per pound for newspapers; while the Commonwealth refused to pay the San Francisco contractors more than 2s. per pound for letters and 4s. 6d. per hundredweight for other matter —a payment wholly inadequate to the value of the service to Australia. Receipts and Payments on Account of the San Francisco, Peninsular and Oriental, and Orient Mail-services for the Year 1904. Saw Francisco Service. Dr. £ s. d. £ s. d. £ s. d. Payments by weight — On mails from New Zealand ... ... ... 18,467 0 1 On mails from Fiji ... ... ... ... 5664 18,523 6 5 Interprovincial service, mail agents, &c. ... ... ... 4,761 4 5 m ~ , (San Francisco to New York ... ... 4,300 7 5 Transit charges j New York tQ Queenstown 1,822 10 9 ■ —— 29,407 9 0 Cr. Postages collected in the colony ... ... ... ... 14,317 18 5 Contributions from Fiji... ... ... ... ... 56 6 4 14,374 4 9 Net cost to the colony .. ... ... ... £15,033 4 3 1,449,250 letters and post-cards, 729,596 books, and 1,438,332 newspapers were received from, and 1,385,566 letters and post-cards, 222,732 books, and 421,284 newspapers were despatched to, the United Kingdom vid San Francisco. The average time within which mails were delivered by the San Francisco service was— From Auckland to London, 30-78 days, as against 30-22 days in 1903 ; and from London to Auckland, 3055 days, as compared with 30-47 days in the previous year. The shortest delivery was made in 28 days.