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objection to this arrangement is on the score of unnecessary expense, and I beg, therefore, to request Your Lordship's consideration to the enclosed Copy of a report from the Postmaster General, in which he suggests that the Colony should build a new Post Office at Shanghai.

Mr. Mitchell also refers to an eligible site for the new Post-Office, which adjoins Her Majesty's Consulate, and which is the property of Her Majesty's Government.

I have referred to Her Majesty's Consul at Shanghai, and enclose Copy of his reply.

There cannot be a doubt, from an economical point of view, as to the advisability of meeting the cost of building suitable for postal purposes in lieu of paying yearly rent for a tent as high as that required by Messrs Tassom & Sons. This could be done at a cost of from $10,000 to $15,000, and I should propose to have the plans prepared in the Survey Department here.

If Your Lordship approves of this proposal, it only remains to enquire what conditions the plot of land referred to would be leased to the Colony, and having regard to the fact that the Imperial Government is interested.

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