7

E.—2.

The cost to Queensland of the service between Brisbane and Singapore is £20,000 She receives in postage collected on outward mail-matter ... £3,900 Do. do. from the United Kingdom on inward mail-matter ... 3,600 Do. do. from non-contracting colonies for the use of line ... 1,450 8,950 Loss sustained by Queensland ... ... ... ... ... £11,050 The total loss to the colonies on the three services is therefore about ... £61,880 If the Imperial authorities were to retain any larger portion of the postage, the loss ou these services would be increased, whilst the cost to Great Britain would be correspondingly reduced. Under existing arrangements the cost to the United Kingdom, according to the despatch, dated the 17th January, 1878, of Sir Michael E. Hicks Beach, of these three services, is as under: — Eastern Sea Service ... ... ... ... ... ... £58,000 Egyptian Land Transit ... ... ... ... ... ... 1,700 Atlantic Sea Service ... ... ... ... ... ... 9,600 United States Land Transit ... ... ... ... ... 15,700 Total ... ... ... ... ... ... £85,000 As I have before observed, the charge of £58,000 the Imperial Government would have to bear, whether the Australian mails were conveyed by the Eastern Sea Service or not. If this amount, therefore, is deducted, it will leave only £27,000 as the cost of the several services to the Home Government, and this will be still further reduced by the amount retained for inland postage, estimated at £10,000, leaving the comparatively small sum of £17,000 as representing the actual loss, under present arrangements, in maintaining communication with the Australasian Colonies. The principle which I believe the English postal authorities endeavour to carry out is to make every service self-supporting as far as possible ; but this I hardly think is expected in the case of their ocean mail services, for I find it stated in the report of the Postmaster-General of the United Kingdom for the year 1878, that the annual loss sustained by the Imperial Post Office in maintaining mail communication with the East Indies, China, Japan, America, and other countries, is no less than £291,300 per annum. It may therefore be strongly urged that the relationship which exists between the Australasian Colonies and the mother-country (conferring, as it does, such an immense benefit to the latter in the shape of trade) fully justifies the colonies in expecting that the Imperial Government should share any loss that may be incurred in maintaining the very necessary services that are now in existence, and which have been found to satisfy the different interests of the various Australasian Colonies. In fact, it appears to me that the first endeavour of our representative should be to try to induce the Imperial authorities to recognize the principle that they should bear a fair portion of the burden of mail communication with the colonies, in its national interest, and quite apart from the consideration of the costliness or profitableness of the services as viewed from a purely postal and economical standpoint. At the same time the fact should not be lost sight of, that, even viewing the question of cost, the more expensive half of these services, under present arrangements, falls upon the colonies, owing to the partial development of steamship traffic at this end of the line, while the competition of the numerous steam companies at the other end reduces the cost of mail communication to a comparatively small amount —so small, indeed, that in the case of the San Francisco Service the retention by the United Kingdom of two-thirds of the postage collected in that country would defray the whole cost of conveyance to and from the United Kingdom and San Francisco. This minute, in which I have dealt briefly with some of the points likely to arise in the course of the negotiation, might be forwarded to Mr. Forster, and he should be fully empowered to make the best arrangement he can for the settlement of the question. It is hoped, however, that the Imperial Government will recognize that the colonies have a strong claim for more liberal consideration than suggested in the last paragraph but one of the despatch, and that no action will be taken by the withdrawal of Imperial aid from any of the existing services, which will imperil their continuance. Saul Samuel,

No. 14. Mr. Gray to the Secretary, General Post Office, Sydney. Sir,— General Post Office, Wellington, 18th July, 1879. I have the honor to acknowledge, with thanks, the receipt of your communication of the 30th ultimo, enclosing a printed copy of papers laid before the Parliament of your colony, on the subject of the despatch of the Secretary of State for the Colonies, of the 17th January last, concerning the future arrangements for the Australasian mail services. I have, &c, W. Gray, The Secretary, General Post Office, Sydney. Secretary.

No. 15. The Agent-General to the Hon. the Postmaster-General. Sir, — 7, Westminster Chambers, London, 4th July, 1879. I have the honor to acknowledge the receipt of your letter of the sth May.* I enclose to you the correspondence which has passed between the Colonial Office and myself. Tou will see that the view I have taken is the one which your letter under reply points to.

* Vide No. 77 of F.-3, 1879.