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be expected, was very conflicting, though chiefly in that part of it which was perhaps least material; on almost all the really important factors the concurrence of information has been very marked. But since, on account of its having often been confidentially given, I am deprived of the advantage of stating explicitly the authority on which my calculations rest, and am therefore obliged to assume the responsibility for these upon myself, you will naturally oxpect that on a question of such magnitude, and where any material error would involve thousands, 1 should at least place before you some of the grounds for the conclusions to which I have come. I will now endeavour to do so. 1. As to Construction, Working Cost, §c, of the Ships. Tou will have perceived that the Galbraith-Denny estimates of 1878 went on the basis that a steamship of about 4,200 gross register tonnage could be built for £115,000, which was under £28 a ton. But it was pointed out that the prices of that day for ship-building were unprecedentedly low; and I am sure that in my present estimates I am well within the mark, for the P. and O. Company have had their latest ships built at several of the greatest ship-building yards, and Mr. Sutherland, the Chairman of that company, allows me to give it as his opinion that a ship of 5,000 tons gross, fitted out in a firstrate manner, with the proper amount of spare gear and machinery, could hardly be built at the present moment for anything less than £160,000. As to capacity, the following list of a number of steamships, chosen by me from the lines running to America and Australia, will perhaps be useful to show the ordinary relation between gross and net tonnage ; and, although it is not likely that for the Australian trade such ships as the " Servia " will be required for some years, it must be remembered that the tendency is now to build large ships, as being worked cheaper, and therefore more profitable. Steamer. Register Tonnage. Registered Gross. JNet. Horse-power. Atlantic lines — CityofEome ... ... ... ... 8,415 5,538 1,500 Servia ... ... ... ... 7,392 3,971 1,000 Alaska ... ... ... ... 6,932 3,579 1,800 Britannic ... ... ... ... 5,004 3,152 760 P. and O. line —■ Eome ... ... ... ... 5,013 2,558 850 Carthage ... ... ... ... 5,013 2,588 850 Shannon ... ... ... ... 4,189 2,162 750 Clyde ... ... ... ... 4,124 2,442 780 Orient line— Austral ... ... ... .. 5,588 3,549 1,000 Orient ... ... ... ... 5,386 3,440 1,000 Liguria ... ... ... ... 4,666 2,980 750 Potosi ... ... ... ... 4,219 2,704 600 Out of the preceding list very few of the new ships are less than 5,000 tons gross; and I have throughout assumed that, if a direct steam service were to be established for New Zealand, ships of equal capacity would be wanted, as indeed they would certainly be the cheapest to build and work. At the same time I am not saying that smaller ships cannot be built to combine great carrying capacity with speed, for a striking instance of this exists in the "Aberdeen," a new cargo-steamer built for the Australian trade, which has lately excited much attention here on account of various improvements in her engines, and also economy of fuel, speed, and large carrying capacity. Though only 3,616 tons gross and 2,370 net register, she can take over 5,800 tons of cargo and coal; is said to have only cost £80,000 ; and has just made the passage from Plymouth to the Cape in twenty-two days. I do not think I need add anything to what I have said already as to speed, consumption of coal, or working cost generally ; for there is not much room for any one who has thoroughly studied those points to go far wrong in estimating them. But the question of revenue is one where serious error can very easily be made; and you will, perhaps, be glad, therefore, if 1 deal in seme detail with the questions of passenger traffic and cargo. 2. Passenger Traffic. The first step to take in connection with the prospect of passenger traffic is to inquire into the actual passenger trade between this country and New Zealand for some time back; but it will be quite as necessary to look also at the example of Australian traffic if any fair judgment is to be attained on the question of how far the establishment of direct steam services to Australia has tended to develop trade there, and whether a similar development may not, within reasonable limits.'be equally looked for in the case of New Zealand. I will first take the chief sailing-ship lines to New Zealand separately. (i.) New Zealand Shipping Company''s Line. In 1881 this company carried, in the outward voyages of fifty-four ships, aggregating 51,000 tons 171 saloon passengers, 151 second cabin, and 203 steerage (exclusive of Q-overament immigrants) ; or, altogether, 525 passengers of all classes. This number was much below the average of the five years 1877-81, which was 234 saloon, 276 second cabin, and 788 steerage, paying their own passage, or close on 1,300 of all classes ; while in 1879 the number had been exceptionally large, amounting to (equal to) 2,900 adults. The number of passengers homeward, on the other hand, has always been small; in 1881 there were only 136 saloon, 28 second cabin, and 115 steerage. The rates of passage-money by this line have not varied, being from forty to fifty guineas in the saloon, £25 in the second cabin, and £16 in the steerage for the outward voyage, and homeward much the same.