4,000 Telephones.

Since our interview with you a few days ago, we have refreshed our recollection on this matter.

When the Oriental Company applied for an assignment of the patents in the early part of 1882, negotiations took place between the Consolidated Company and Messrs. Gouraud, Bigelow & Cargill, and ultimately an arrangement was made under which Messrs. Gourand & Co. were to take and pay for an immediate delivery of 200 Telephones, and agree to take the remainder at an increased rate of delivery; the Telephone Supply Company, to whom they assigned the benefit of the contract, guaranteeing the performance of the contract.

Mr. Gower and his associates then, at the request of the Consolidated Company (who had been advised that the assignment could not be withheld), assigned the Oriental patents to the Oriental Company at the expense of Messrs. Gouraud & Co.

The Consolidated Company received £1,800, and the 200 Telephones were, we believe, never removed from the warehouse of the Consolidated Company.

In the following May an action was brought by the Consolidated Company against Messrs. Gouraud & Co., claiming performance of the contract for the supply of Telephones, and terms of settlement of this action were approved by the Board of the Consolidated Company in August, 1882, after the determination of the Post Office contract, and eventually carried out. Under this arrangement the Consolidated Company retained the £1,800 they had received, the 200 Telephones were handed back to them, and £5,250 in cash was also paid to them. page 13 We should perhaps point out that the rights of Mr. Gower in the Oriental District consisted of the benefit of the contract for the supply of 4,000 Telephones at a price which might vary.