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No. 76. Mr. Gray to the Secretary, General Post Office, Sydney,, (Telegram.) Wellington, 28th January, 1886. Postmaster-General left it to contractors to negotiate, through their Frisco agents, with United States Post Office for payment of the four thousand. Messrs. Spreckels have already written Washington, but no payment as yet received, and we are paying full subsidy. Have communicated with Union Company. They will not object to deductions being made from subsidy, if this be desired. Contract authorizes contractors receive United States payments, and Postmaster-Geneial did not deem it necessary to specially instruct Washington to pay. However, if your office thinks otherwise, Postmaster-General may reconsider. The Secretary, General Post Office, Sydney. W. Gray.

No. 77. The Secretary, General Post Office, Sydney, to the Secretary, General Post Office, Wellington. Sydney, 4th February, 1886. Postmaster-General suggests that copy of contract be forwarded by New Zealand to Washington, directing attention to clauses that affect payment of American subsidy. Meantime New South Wales will pay contractors in terms of contract- -namely, less proportion of American subsidy. Secretary, The Secretary, Post Office, Wellington. Post Office.

No. 78.' Mr. Gray to the Postmaster-General, Washington. Sir, — General Post Office, Wellington, 26th February, 1886. I do myself the honour to forward you a copy of the contract recently entered into by the Governments of New South Wales and New Zealand with the Union Steamship Company of New Zealand (Limited) —with whom are associated the Messrs. Spreckels, of San Francisco —for the performance of a four-weekly mail service between Sydney, Auckland, Honolulu, and San Francisco, for a period of three years from the 21st November last; and to draw your special attention to clauses 10 and 11. You will observe that the 10th clause embodies your agreement—as per attached copy of cablegram —to contribute £4,000 per annum towards the cost of the service, and also requires the contractors to collect the amount, and to account to the Postmasters-General for two-thirds of the sum. Clause 11 empowers the Postmasters-General to deduct from the subsidy-payments to be made the contractors the proportions of the £4,000 as specified in clause 10. The deductions are now being made ; and, under these circumstances, you will perhaps be good enough to direct that the contractors, or their authorized agents, shall be paid such proportion of the £4,000 as may bo now due, and to further arrange for periodical payments. The Messrs. Spreckels, I understand, have already written you on the matter of payments. I also enclose copy of my cablegram of the 23rd September last, to which yours of the 25th idem was a reply. I have, &c, W. Gray, The Postmaster-General, Washington, D.C. (For the Postmaster-General.)

No. 79. Mr. Gray to the Managing Director, Union Steamship Cor.pany, Dunedin. Sir,— General Post Office, Wellington, 26th February, 1886. I have been directed by the Postmaster-General to enclose you copy of a letter sent by the outgoing mail to the Postmaster-General, Washington, and to say that a copy has also been sent Messrs. Spreckels Brothers. As you are aware, Sir Julius Vogel arranged with Mr. Center that his firm should communicate with the United States Post Office ; and it is at the suggestion of the New South Wales Post Office authorities that this office has addressed the Washington office. The Sydney Post Office has also intimated its intention of paying you its share of the subsidy, less the proportion of the American contribution, and Sir Julius Vogel has decided that a similar course should be followed by this office. The deductions will therefore be made from future payments by this office, and an adjustment of accounts, now rendered necessary, will be made on making the next payment. I have, &c, The Managing Director, W. Gray, Union Steamship Company of New Zealand (Limited), Dunedin. Secretary.

No. 80. Mr. Gray to the Messrs. Spreckels. Gentlemen,— General Post Office, Wellington, 26th February, 1886. I have been directed by the Postmaster-General to forward you the accompanying copy of a, letter addressed by this mail to the Postmaster-General, Washington, in connection with 4—F. 3.