Mr Frederick Peei writing on the 7th May to Mr Ward, states on behalf of the Lord's Commissioners of her Majesty's Treasury " that they are unable to assist in the establishment of the Panama service, owing to the expense which the scheme would entail on the Imperial Governments under the scheme submitted." The inter view with Mr Gladstone was held on the 3.9 th June, when it became clear that he;hiid c arrived at a foregone conclusion, similar 1^; that so curtly intimated in the Treasury letter. This closed the first stage of the negotiation. It comes out with sufficient clearness in the correspondence that Mr .; Ward and Mr Hamilton had hitherto relied on the Imperial Government becoming ; j a party to their scheme and bearing a I share of its cost. But in this expec | tation they were completely disappointed and I Mr Hamilton consequently felt constrained Ito retire from the field. He did so because | under the act pass.edby the Legislatureof N.S. i Wales an appropriation of, £50,000 was made, ' conditionally that the Imperial Government ' would contribute also. This > condition was ( not fulfilled, and Mr Hamilton being simply ! an agent could not .bind his government,., to anything else. It was an irreparable blunder, :i that Mr Ward made no arrangement /for such a contingency as this with the Govern* ment of New South Wales ere he left that colony. It might surely have occurred to him to say when writing to the Colonial Secretary at Sydney : "It is possible the Imperial Government may refuse to enter into such a scheme. In that case, will New South Wales still join New Zealand in a purely Colonial effort to establish the and what would be her contribution P" , This , { unfortunately had not been done, arid so 1 directly the Imperial Government declined to have anything to do with the service^ ,the co-operation of N.ew South Wales was .lost, and Mr Ward left to fight the battle single handed. •• • •"-■■•• "■"■' Simultaneously with this first failure, Mr Ward received offers from various private quarters to undertake the service. Then commenced a second lengthy negotiation and correspondence, which ultimately resulted in the preparation " and signature^ of "The Panama Contract." " *"•'.". As : early as "August. 