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nor commercially would it suit New Zealand for the steamers to extend from Sydney. Now the Sydney trade is even now far too valuable to run risks about, and is increasing very fast": in 1881 tha value of the goods shipped to Sydney exceeded by £800,000 the value shipped to Melbourne; and neither the P. and O. nor the Orient would shut out Sydney freight to make room for New Zealand. With regard to foreign lines I intend (in order not to leave any inquiry unexhausted) going to Paris and seeing the people of the Messageries Maritimes, which is the only foreign line worth thinking of. But it will be remembered that for postal objects there would certainly be many difficulties in the way of any foreign contract at all. I must now conclude. My purpose, throughout a letter whose length would otherwise be inexcusable, has been to supply a number of tests by which the Government might safely judge what subsidy to give, and contractors also tell how much to ask But I also meant to show why I think that, subsidy or no subsidy, steam is sure to come. A great and daily-increasing change is taking place in the carrying trade of the world, and sail is yielding more and more to steam. lam unable to see what causes there can be at work to prevent a like change hereafter in the carrying trade of New Zealand, or why it should seem so unreasonable to suppose that steam will gain upon the sailing ships as much for us as it is doing for every other part of the Empire. Twenty years ago there were only half a million tons of British-owned merchant steamers; in 1881 there were nearly 5,800,000 tons, estimated to have cost not far from £90,000,000 to build. Seventy-six per cent, of England's ocean-carrying trade is now done by steam. There are now building in the United Kingdom steamers whose aggregate length is said to be seven miles. It is certain that wo are on the threshold of even greater progress in steam than any which the last few years have seen; and it surely cannot be that New Zealand alone will be excluded from it, or long remain the only great colony in the southern seas whose English trade must all be done by sail. I have now completed, as far as I am able, the duty that was imposed upon me by the Government. It is not within my province to offer opinions of my own as to the course which it would be wisest for the colony to take. My business was to bring together information that might be of use to the Government in their advice to Parliament, and I hope I have enabled you to test what it is worth. I have, &c, The Hon. the Premier, "Wellington. P. D. Bell.

No. 11. The Agent-General to the Hon. the Premier. Sir,— 7, Westminster Chambers, London, S.W., 17th May, 1882. I am desirous of preventing any misapprehension arising out of what I said in my recent letters upon the steam question as to the part which Mr. Galbraith and Mr. Peter Denny had in the matter, as it will-very likely appear to you that I had not properly acknowledged the generous and really invaluable assistance they had given me all through my investigation. It must have been obvious, indeed, to every one that no amount of general information as to trade and traffic, such as I was able to bring together through the courtesy of others, would have been of practical service to the colony without the detailed statements which Mr. Denny and Mr. Gralbraith had enabled me to present to you upon questions of tonnage, measurement capacities, speed, coal consumption, and other essential features in design, as well as upon a variety of equally significant questions connected with the working of a line. But I was imder what now turns out to have been a mistaken impression that I should best consult their wishes by refraining from referring to their part in these, except in very indirect terms; and I am now very glad that, although they could not see their way to let me send you the actual estimates and designs, it was not their intention to debar me from admitting, in the full way I should have wished to do from the first, the extent of my obligations to them. I cannot express these, I think, in a more complete way than by saying that, if my letter should turn out to be of any use to the Government and Parliament, you have to thank those gentlemen for it, and not me. If you present the despatch of the sth May to Parliament, I request you will be pleased to present this letter also. I have, &c, The Hon. the Premier, Wellington. E. D. Bell.

No. 12. The Agent-General to the Hon. the Peemier. Sib,— 7, Westminster Chambers, London, S.W., 18th May, 1882. There are one or two points relating to a mercantile line which I kept out of my printed letter, and which I may as well not delay referring to any longer. I am sure that, if Parliament decides in favour of having a direct line at all, the first thing you will find it necessary to do is to determine four things : — 1. The amount of subsidy you will give; 2. The size of the ships ; 3. What ports they must enter ; 4. The port of first arrival and last departure. With regard to the question of subsidy, the information I have already given you may perhaps assist you in coming to a conclusion as to the least sum that would be likely to be required for a mercantile line. I showed that a subsidy of £10,000 might suffice, in addition to the earnings of the mercantile steamers, to yield a dividend of 7\ per cent, to the shareholders of such a company as would necessarily have to be formed to build and work the boats. But I pointed out that such a result could only be arrived at on the supposition of every steamer being full up both out and home; and, if the colony 3—F. 4.