Policy pursued by the Government purely defensive. Te Kooti kept in check and followed without provoking King natives. Te Kooti, instead of being at the head of hundreds, has been reduced to a miserable fugitive, with hardly a score of followers. No reverses on our side. No disasters. Losses in the field insignificant as compared with those of the two previous years, when losses on our side were equal to those of enemy. Formation of railways. Chief difficulties in the old Country. Parliamentary enactments. Litigation. Differing altogether from America, where every encouragement is given both by the State and private individuals. Purchase of land by Government. Auckland. Considerable amount of compensation paid. The State should exercise its right of acquiring territory. What are the grounds of objection? Loss instead of Profit. Early history of the Colony. System of direct purchase. Early purchasers. Country gained very little by the purchases then made. Commissions appointed. Courts of Enquiry established. Laws of various kinds. Questions of Titles Act. None reached the root of the difficulty. 292,575 acres awarded by Commissioner's Court. 254,000 acres left to the Colony, of portion of which no possession has been taken, but is still an asset of the Colony. Hokianga. 15,000 acres. £32,000 Scrip. £700. Surveys. The North, where these purchases were principally made, has been the least progressive. Many old settlers died without perfecting their titles, broken-hearted. Petitions, Green, Jones, Busby. Confiscated lands. 1700 acres of direct purchase in the vicinity of Auckland, in Governor Fitzroy's time. 90,000 acquired under ''penny an acre'' proclamation, on the banks of the Waitemata towards Kaipara. Quantity sold of those lands. By return published in Blue Book of 1856 - 201,763 acres. Quantity granted 44,785 acres. Unappropriated 219,000 acres. In addition to the land thus acquired a further extent of 2,434,484 acres acquired by action of Native Land Purchase Department. Since 1856, the land sold in Auckland, Hawke's Bay, and Wellington, realised..... £695,141. 16. 9. As follows:- Auckland Cash 889,770. 3.10 Scrip 18,797. 8. 9 108,567. 12. 7 Hawke's Bay Cash 269,230.17. 7 Scrip 10,480. 7. 6 279,711. 5. 1 Wellington Cash 280,625.10. 1 Scrip 26,237. 9. 0 306,862. 19. 1 £ 695,141.16. 99 Cash £639,626.11.6. Scrip£55515.5.3. 488,000 acres granted in Auckland. No disputes with purchasers. 50,000 acres at Coromandel. In all these purchases there are signs of progress and improvement. Gold, Coal, and other minerals abound on what has been termed bare clay hills. Land on the whole of average quality. It has been demonstrated that no part of the island is impenetrable to our forces. Our troops went from Whanganui to Taupo, to the source of the Urunui, and to Rotorua, and through the Urewera Country from Poverty Bay to Opotiki. They lived on eels and fern root, and carried no tents or baggage. Wherever the standard of rebellion was raised, we could promptly bring a force that it was impossible to resist. Re-occupation of Waitotara district. No settler disturbed or Country abandoned. Frontier settlers, best qualified to give an opinion as to the change which has taken place. Increased value of land at Waikato. Results, - such as road-making of a permanent character. Country subdued by pick and spade. Opening up of the country has not been disregarded. Demilitarising. - We do away with a variety of superfluous Officers; and with that military system requiring large escort and commisariat, and substitute simple machinery. Can take the field without the delays and expenses connected with military movements. Employment of friendly natives. Risk attending it. Tamati Walker. Other tribes who declared themselves our allies have remained so, and are likely to continue so, if not irritated and provoked to adopt a different course. Some natives not satisfied with the treatment they have received from present Government. System of paying lump sum for services in the field. Military operations may be summed up as follows:- Operations, if not attended by brilliant achievements, have been signally successful. Losses on our side trifling. The country will not be slow to recognise the difference between the present and the past. If peace is not absolutely established the possibility of war on a great scale is out of the question. There may be difficulties to overcome. Operations of the past year speak for themselves. No necessity to parade them before the public. he says:- The Defence Service has been brought down from £109,025, including liabilities, which was authorised for 1867--68, to £47,497 for the present year (1868--69). On the 6th. October 1868 Mr. Hall brought down a Supplementary Financial Statement, in which he asks for a vote of £81,000 for Armed Constabulary, and £50,000 for Contingent Defence, in addition to a balance of £40,000 which it then, for the first time, appeared, was to the credit of the Defence Department from the Public Debts Act, making in all a sum of £171,000. To make the accounts agree, however, it is necessary to add the other provision made by the House for Defence Expenditure, under what may be called the Peace Establishment of £23,800. In all £194,800. It turned out afterwards, on making out the accounts that the balance from the Public Debts Act estimated by Mr. Hall at £40,000 was really £44,180; which, with recoveries added to votes, placed an amount of £201,115 at the disposal of the late Government for Defence services, of the year 1868--69; in addition to which they added a further sum of £40,000 by Order in Council, making a total of legally available money of £241,115. The expenditure of that year, as will be shown by a return laid on the Table of the House, by the Honble. the Colonial Treasurer, last Session, amounted to £324,403; being an excess of £83,288 over the amount placed by law at the disposal of the Government. For the service of the year 1869--70 a sum of £230,800 was placed by the Legislature at the disposal of the Government for the Defence Establishment, in all its branches; to which must be added £40,000 under Order in Council, in all £270,800. The Expenditure amounted, as stated in the Treasurer's Financial Statement, to £273,361; to which a sum of £10,000 may be added for unforseen liabilities up to 30th. June; making a possible total of expenditure of £283,361 in all, or £12,561 in excess of legal permission. But there is an item which will reduce this excess, namely recoveries, not yet brought to account, for rations and stores issued to men of the Colonial Forces, and to other Departments of Government, the Telegraph, for instance; and these recoveries are estimated, when fully made up, to amount to some £5,000 or £6,000 in further reduction of the excess. Expenditure £324,403. Funds legally available 241,115. Excess £ 83,288. Expenditure £283,361. Funds legally available 270,800 Excess £ 12,561. Recoveries to come to a/c say, 5,000. Estimated excess £ 7,561.