D—No. 4

being so highj been deriving no advantage from the trade, and yet I am endeavouring to please the public by again altering all the arrangements of the ships ; and also I am, at a great outlay, increasing the efficiency of the ships by a thorough overhaul and repair. But I would respectfully suggest that this is not the time, under such circumstances, to attempt to burden us with expenses which were never contemplated by the contractors, nor to exercise that severity of construction of the contract towards us which now seems to obtain. I had hoped that in my recent visit to Auckland, and by shewing that I was most desirous to do all that was beneficial to the service, a different feeling towards the Company by the Government would have arisen ; but not only am I disappointed in this, but the encouragements held out to the promoters of the undertaking seem to have resolved themselves into penalties, restrictions, and unexpected demands. I fear that the recent acts of the Government will much interfere with my exertions to procure better vessels, for they are calculated to create distrust iv capitalists, whether in England or the colonies. We, too, are often blamed for irregularity, when it arises (as during the last four months) solely from the irregular arrival of the mails from England, causing us great loss, in addition to the censure or animadversions (mistaken as they are) of the public. I may very respectfully express a hope that the liberal spirit in which I am conducting the affairs of the Company may be reciprocated by the Government. I am, &c, The Hon. the Postmaster-General, John Vine Hall. New Zealand.

Enclosure 1 in No. 3. MR. Z. C. PEARSON TO LORD CLAUD HAMILTON. Russia Chambers, 98, High-street, Hull, November 23rd, 1861. Dear Lord Hamilton, — Having before me several of the complaints which have been made by parties in New Zealand against our steamers, &c, I think it my duty to acquaint you with some of the facts which transpired when the contract was entered into. Henry Sewell, Esq., was delegated by tho Government of New Zealand to come over to England to negotiate a loan of £500,000, and also to obtain the support of the Home Government to establish a mail service between Sydney and New Zealand, &c. He was in the country about twelve months before he succeeded in getting any one to undertake the service. He tried the Royal Mail Company, and various other parties, but in every instance failed, until I myself made him the proposal to do the work required with ships of nearly 2,000 tons, for £40,000 per annum. When I made him the proposal he said it was the first bona fide offer he had had, notwithstanding his exertions since he had been in England, and further said that the vessels of the size mentioned were far too large, and that apart from the subsidy the cost of working them would be so great that it would entail ruin upon us, and would in the end compel us to withdraw from the service, and so leave them no better off and ourselves ruined. I asked him to fix himself the size of the boats he would recommend, naming at the same time two new boats I had just ready for sea, when he said those two were abundantly large, and that one larger and one smaller more, but made quite sufficient for the service, and that £24,000 a year was the most that he could recommend the Government to give. I brought the two steamers to London for his inspection, and he approved of them, and the cabins were altered to meet the views he expressed, at a considerable cost. The contract was entered into, two other vessels were bought, and the whole were inspected by the Government Surveyors, and approved as required by the contract, the vessels varying in size, but all exceeding in tonnage the size specified by the contract. Further, the object was to carry mails and not chiefly passengers, and Mr. Sewell again and again said that too large a class of boats would entail ruin and defeat their object. He also said that no doubt hereafter when the trade was developed larger ones would be desirable, as I believe myself. I think it is unfair of the Government to complain; they ought to give us credit for so benefiting the Colonies. As Mr. Sewell would in all probability have had to go back without a mail service, if I had not myself undertaken it for him, and also having carried their mails so well and so regularly in accordance with the contract, I think they ought to offer us their support in making for shareholders that return which they are entitled to for their investments. I feel satisfied that the present Government of New Zealand cannot be aware of all the circumstances attendant on the entering into the contract, and the difficulties Mr. Sewell met with, as also the fact that the size of the boats were fixed in the contract, not only by Mr. Sewell, but by Mr. Wilson, the then Secretary to the Treasury. If the colonists had desired, they could have had themselves the greater part, if not all, the stock in the concern, but they declined, and not one share was sold in the Colonies. Further, the Colonies were thoroughly tried, before even they applied to England, to see if they could not get money enough to buy vessels, but that failed also; and I say it is most unjust, after we have been induced to invest our money at the Antipodes, with all the risks and contingencies attendant upon such investments, and have continued without break down, carried the mails and fulfilled our contract, and further have expended hundreds of pounds from time to time in altering our vessels to accommodate the people, that such complaints should be made, and such requirements demanded, as are made and demanded without (along with them) thanking us first for what we have done, and offering us a consideration to do more for them. I cannot but believe that the sailing packet owners and others interested are at the bottom of all these complaints, ate, and that the Government have been

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