The final decision respecting the ocean mail services is deferred, pending the receipt of a reply from the Agent-General to the lateßt telegrams from Government on the subject as to the views of the Imperial authorities. I bear that the Union Steamship Company would be quite willing to go m for the con tract on their own account if a fair subsidy ooulcl bo maintained, and it the contract were for a term of years, and that they would build steamers specially for the service, but m that case they could not get oven the £23,000. American subsidy, which is payablo only to American steamers. Then there would bo the cost of conveying mails between San Francisco and London to be provided, and this would be too heavy for tho colony to stand. It is believed (as I informed you some dayß ago) that the Imperial Government does not look with a favourable eye on tho direct outward service, but would prefer the federal line via Brindisi, partly as being weekly and quicker, and partly as adding another link to the official conncotion between Vow Zealand and Australia. It is usually understood that eaoh country defrays tho cost of conveyine its own outward mails, and so it is probable that New Zealand will send Home the mailß by direct boat, and tlis Imperial Government will forward the outward mails by the federal service. If so, the New Zealand let tera will be subject to considerable delay, as the Union time table does not fit m with that of the Orient and P. and O. lines, and so the mails would be delayed m Melbourne, unless New Zealand specially subsidises tho Union Company to bring them and to alter their time tables accordingly^ This would mean a heavy outlay, more, it is feared, than the colony can offord, so meanwhile tho question is involved m considerable difficulty. In any case, however, Mr Mitchelson will give notice of his resolutions on the subject before the end of next week, as members are growing impatient to have the thing settled.
