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Apologises for leaving his letter so long unanswered, and explains that during the previous year he has had more than his full share of 'trouble and annoyances'; his wife's illness, his moving house to Melbourne, 'fires on the farm, and very unpleasant relations with the governing body of the University who have tried to evade their contract with [him] in every possible particular'. Discusses life in Australia. Of Melbourne he says that 'it is not equal to London, Paris, or Rome or perhaps even to Sydney.' Refers to the Australian good nature, which he presumes stems from the general prosperity of the country. Claims that the libraries are 'not as good as they should be', but that he can get any books he wants put in. Complains of the 'unparalleled dispersion of people in the suburbs'; he has to live in town to be near his work and is in 'the unfashionable quarter, close to the university', while 'friends generally live in the country at any distance from 3 miles to 10, and are not often accessible by railway.' Refers to the university students, of whom there are about one hundred and eighty. Observes that some 'young ladies' pass the Matriculation examination, 'but they have not yet presented themselves at lectures', and are still excluded from degrees. Reports that he has started a Debating Society.

Discusses local politics. Describes the Australian constitution as 'a ludicrous parody of the English; [the] House of Lords being a council of men with a property qualification chosen by electors with a property qualification, and indissoluble for 10 years, but with no real power except of obstruction. Refers to a recent discussion on the reform of the constitution, involving the Conservatives, the Ultra-Radicals, and the Liberals, during which 'the Premier fell ill, a new Ministry has been formed; and the whole question is adjourned till next year.' Hopes that the Second House will be abolished altogether soon. Refers to the other two questions being discussed: Protection and Assisted Emigration. Of the former, believes that there is no chance of getting rid of it; and in relation to the latter, would be interested to hear what Sidgwick and Fawcett think of it. Asks Sidgwick if he believes that Macmillan's Magazine would insert an article on Australia as 'a [home] for persons of moderate fortunes.' Discusses the advantages for English families who would come to live in Australia. Declares that he shall have finished his book for [Rivington] in another two months 'if all goes well'.

Complains that he gets no Cambridge news in Australia. Reads papers such as the Times, the Spectator, the Pall Mall [Gazette], 'and occasional Guardians.' Expresses regret at the death of [Crotch]. Professes to be 'very glad to read such flourishing accounts of the Ladies Lectures at Girton Hall', and expresses the desire to organise something similar in Melbourne. Asks Sidgwick to remember him to Miss Clough, and to find out when Miss [Bulley]'s School History of England is likely to appear, as Miss Thompson's text book does not seem to supply the want adequately. Asks him to remember him also to Mrs Luard, Mrs Venn, Aldis Wright 'and other friends.' With carte de visite portrait of Pearson.

Remarks on Sidgwick's 'complete ignorance of the political situation in Victoria', and endeavours to give him a history of events during the preceding two years 'with a preface as to the causes of trouble. Discusses the problems associated with land and land-holding and the involvement of land-jobbers, land-sharks, the banks, capitalists, the State and the general population in the issue. Refers to the various systems that had been put in place in order to solve the problem, including selling land by auction, 'free selection', the drawing by settlers for the right of choosing homesteads at low prices on large blocks of land surveyed by the State. These systems, having found to be unsuccessful, were replaced by another, equally flawed system, under which a 'selector' is bound to live on his land for seven years and to execute improvements of a certain value, and does not acquire a negotiable title until the end of the seven years. Mentions a systems that he has proposed, which involves making it 'unprofitable for the large owner to buy by applying the principle of [ ] duties to a land-tax and raising the tax in proportion to the area held.' In relation to the land-tax, states that it would be 'professional ruin for a doctor, clergyman, lawyer or schoolmaster to say that he was in favour if [it]', but that he felt safe voicing his support of it because of his contract, of which there were three years left. The principal of his school however claimed that he would be ruined because the boarders consisted mostly of daughters of squatters, who would be withdrawn on account of Pearson's stance on land tax, so the latter agreed to release the principal from their 'covenant'.

Declares that he 'failed for Parliament from entire ignorance of local politics, and because Government strained every nerve to defeat [him]', but his party was successful and offered to make him permanent Head of Education [Officer]. He declined this position, but accepted a commission to report on the educational system. Refers to this report, which he sends to Sidgwick 'by last Mail'. Announces that he is now waiting for a vacancy in parliament. Returning to the issue of tax, reports that Berry 'abandoned the progressive element in the Land Tax; and proposed on [ ] on the English Income Tax, but so clumsily constructed as to be very uneven.' Declares that the Conservatives 'are furious that a tax of any kind has been imposed on land' and that they passed a Land Tax, and threw out a bill for Payment of Members, 'expecting to deride the Liberal party on that issue, but this policy backfired on them and public opinion has hardened on the Liberal side. Refers to the dismissal of all the county court judges and police magistrates by the Liberal leaders - a move he deems to be 'foolish'. States, however, that the Liberals are stronger than they were, and that the next question at issue is in what way the Council is to be reformed. Pearson himself advocates a plebiscite: 'that a measure carried in two successive sessions of the Assembly shall become law unless the Council demands a plebiscite', which will give the Council 'the power of criticizing and suspending but not of stopping measures demanded by the popular voice.'

Announces that they have been on the verge of civil war, and have only escaped it through the habit of order and because the Conservatives 'were cowed by the sense of weakness.' Reports that the Governor and Berry 'have been repeatedly threatened with assassination', and that the Argus has announced that '"assassination is the sole defence of the weak."' Refers to the Liberal and Conservative Presses. Declares that they are waiting anxiously 'for news of peace or war from Europe.' Announces that hitherto he has been 'strongly against the Turks', but 'cannot wish Russia to triumph in a war against Great Britain, as such an [issue] would paralyse the liberal cause everywhere.' Does not believe in war, but does not like to think of Bosnia, Thessaly and [Rommelia] reverting to their old condition. Reports that public opinion in Australia has been on the whole Turkish, but that he helped to keep their chief Liberal organs, the Age and the Leader 'on the right side.' Promises to send some papers to Sidgwick, but does not think that the latter will care to see much of them; declares that a paper like the Nation is 'impossible'. Awaits the results of legislation on Oxford and Cambridge with great interest, and mentions that he may be in England 'before the controversy is over.' Is anxious to see old friends, and mentions that his wife's family is in London. Declares that he would be inclined to make some part of Europe his home again, if there were not work in Australia that he thinks he can help in doing.