Hamilton to Merivale (Permanent Under-Secretary)

I am desired by the Lords Commissioners of Her Majesty's
Treasury to state, for the information of Secretary Sir E.B. Lytton, with reference to your letter of the 2nd October
last,

that My Lords have been in communication with the
Postmaster General, and also with the Agent of the Panama
Railway
Company

on the subject of the Postal Service with
British Columbia.

My Lords are informed that considerable expense and
inconvenience might arise, in reference to the passage across
the Isthmus of Panama, unless satisfactory arrangements
should be made in the first place with the Railway Company
and with the Government of New
Granada.

The Agent of the Company undertook to procure from
his Company an undertaking that any arrangement made with
the Company by Her Majestys Government should cover any
demands made by the Government of New Granada, and secure
the Mail Service from the interruptions and inconveniences to
which the Mails of the United States have been subjected in
the passage of the Isthmus.

It was necessary, however, to refer to the Company in
America, and My Lords await the reply which the Agent expects
to receive shortly.

In the mean time an Overland Mail has been established
by the American express
Company

in connection with the Atlantic
Royal Mail Steam Navigation Company, which has now entered into
a monthly service to New York, and My Lords are disposed to
believe that a cheaper and more expeditious route could, at
least for the present, be established by this, than by any other mode.

The Postmaster General has recommended that the contract
vessels of the Royal Mail Steam Company from Southampton to
Colon should be used rather than the Contract vessels to New
York or Halifax, in order to save the expense of a new service
from Halifax or New York to Colon, but in either of these cases
the arrangements must, in the first instance, be completed for the
passage of the Isthmus of Panama, and a Steam Service instituted
between Panama and New Columbia, which will be expensive, and
require a considerable time in its preparation.

My Lords are, therefore, disposed to think that it would
be desirable, without further loss of time, to communicate
with the Atlantic Royal Mail Steam Navigation
Company,

who
represent themselves as the Agents of the American Express
Company, and as authorized to contract for the delivery of
goods and Passengers at New Columbia, and to ascertain whether,
and on what terms, they would contract for the delivery of
Her Majestys Mails for a limited period—say one year.

I am to request that you will move Secretary Sir E.B. Lytton to cause My Lords to be favoured with his views upon this subject.