MEMORANDA RELATIVE TO THE SEAT OF GOVERNMENT, NATIVE AFFAIRS, &c.

Otago Daily Times, Issue 1049, 1 May 1865, Page 5

MEMORANDA RELATIVE TO THE SEAT OF GOVERNMENT, NATIVE AFFAIRS, &c.

(from ova wblijlkhtott caRKKSPONDKirr.)

No. 2. MEMOnAKDPM BY MINISTERS. (Continued.) Ministers transmit to his Excellency copy of a letter of instructions sent by this mail to the Crown Agents, requesting them to deliver to the Lords of the Treasury £.500.000 Colonial Debentures, being part of the Three Million Loan authorised to be raised under the <: Loan Act, 1803," the interest to be at 4 per cent. The arrangement contemplated by the late Colonial Treasurer, Mr Reader Wood, was founded on a supposed guarantee to be given by the Imperial Government for one million sterling at 4 per cent., out of which a sumsomewhatkssthan £500,000 was to be retained by the Imperial Government to liquidate the claims on the colony. For reasons already sufficiently made known, that proposal failed. Adverting- to the various negotiations which from time to time have been entered into respecting the liquidation of the debt due from this colony to the Imperial Government, and to the fact that the promises relative thereto, whether expressed or implied, still remain unfulfilled, Ministers are of opinion that the good faith of" the colony absolutely requires that it should no longer delay making definite provision for the discharge of this debt.

It now remains for the colony to do its part towards carrying out an arrangement for satisfying the Imperial claim, which it is considered will practically be effected in the manner stated. The colony having transferred to the Imperial Government £500,000 4 per cent, debentures, it will rest with the Imperial Government either to hold such securities or to cover them with a guarantee, and realise them in the English money market. The colony will account annually for the interest and sinking fund provided for in the Act of 1863. In taking this step, Ministers have been anxious to avoid the dilemma of an indefinite postponement, into which the in~ creasing liabilities of the colony might otherwise have unavoidably place it; on that point they observe that, on the one hand, the Colonial Parliament would not, in their opinion, sanction—nor, indeed, could the colony bear—the burthenof any additional unguaranteed loan; and, on the other, that, after deducting the present large payment, the most sanguine calculations, based upon an assumption that hostilities will almost immediately cease, only show a possible remainder of the Three-Million Loan barely adequate to meet such an expenditure as may enable the Colonial Government to carry out the outline of those precautionary measures of defence which prudence will demand on the conclusion of five years' warfare' in a country of mixed races. His Excellency is aware of the extreme financial embarrassment under which Ministers have had to conduct his government during the last few months, and will at the same time, they believe, readily admit, that they have never proposed to recoup war expenditure by hasty and indiscriminate sale of confiscated land, whilst they have endeavored cordially to cooperate with him in a firm but just and temperate policy towards the native race. Under all the circumstances of the case, at a time when the colon} 7, instead oi' clinging to a commissariat expenditure, is proposing to rely on the energy and manhood of the settlers, and the loyalty of both race 3, in order to secure the future peace of these islands, and is thus adopting a policy one of the main features and immediate results of which will be to relieve the imperial Exchequer of an annual expenditure of at least one million—an expenditure which for some years past has enta:led a sacrifice on the British taxpayer which the colony recognises with gratitude—at a t".ne when capitalists decline the colonial securities, because New Zealand has been involved in a protracted and disastrous war, for which the colony cannot certainly be deemed wholly, if at all, chargeable; and at a time when the colony is parting with a considerable portion of its remaining securities to repay arrears to the Imperial Government ; Ministers submit that, at such a time, the colony has a reasonable and just claim on the mother country for some pecuniary aid towards enabling it to bear the heavy responsibilities it is about to undertake. They trust, therefore, that the Home Government will extend its aid to the colony cither by covering the remainder of the three million loan by the Imperial guarantee, or by making to the colony an annual grant in aid of extraordinary expenditure for the next four or five years. Ministers request that his Excellency will be pleased to transmit this memorandum to her Majesty's Secretary of State. ~ W. FITZIIEUBERT. Wellington, 23rd March, 18G5. Enclosure No. 2. Colonial Secretary's Office, Wellington, 11th March, 1865. Gkntxkmen —I transmit herewith a copy of a resolution (No. 50) passed by the House of Representatives, relative to the claims of the Imperial Government upon this colony. I also transmit copy of an official minute by Ministers (of 15th December, 1864) relative to the same subject, which haa been transmitted by his Excellency the Governor to the Right Hon. the Secretary ot State for the Colonies. In accordance with the above resolution and minute, and referring to the letter to you (No. 1, 2nd Jan., 1865) from this department, relative to the disposal o€ the unraised portion of the Three Million Loan, I have the honor to request that you will be so good as to issue, under the " New Zealand Loan Act, 1863," in favor of the Imperial Government, Debentures to the amount of five hundred thousand pounds, £500,000 (part of the unraised portion of the three million loan), such debentures to bear interest at the rate o£ 4 per ce,nt. per annum, and to be taken by the Imperial Government towards liquidation of the debt due from this colony to the Imperial Government. You will be good enough to place yourselves in communication with the ImpcMANSE STREET,

rial Government, and arrange for making the Debentures in such ionn and for such amounts, &c, as may best suit their views; the interest may be made payable in London at the Crown Agents' office. The interest find the sinking fund provided by the " Loan Act, 1868," will be remitted iv due course. In the Order of Council, dated 29th December, JBGI, (a copy of which was transmitted to you in the letter before referred to) the Governor, in pursuance of of the " Ilatfi of Interest Acr, 1804," ordered that the rate of interest on monies to be hereafter from time to time borrowed under the •' New Zealand Loan Act, 18C3," may be raided to C per cent., and you are therefore not precluded from issuing debentures at a less rate of interest. I have, &c. WIM.IAM J-'rr/.ItKBIIFKT, For the Colonial Secretary.Messrs Julyan & Sargeaunf, Crown Agi-nts for the Colonies, Spring Gardens, London.

No. ;j. MK.MOXt.VNI.MJM IJY MIMSTKRH. Minister* have learned from the G vernor's dt-spatch to the lUght I lonorab the Secretary of State for the Colonies, the 7th January, JSG.I, No. 10 (which w laid before them on the -'Jrd inst.), that h Excellency is desirous of receiving a form statement of their views with regard totl defence of the colony. Her Miijoty's Secretary of State h; pointed out the futility of any cxpectatio on the part of the colony that Imperil troops will be retained in New Zealan unless upon terms which it h impossibl for the colony to accept. On the other hand, the Legislature ha urged the withdrawal of the troops at th earliest practicable period, and has ex pressed its determination to make ever; possible effort to place the colony in ' position of defence against internal aggres sion. . Mr Weld, the present Premier, befon assuming office, submitted certain proposi tions for the acceptance of his Exceiiencj the Governor, in the following terms: — " Mr Weld is of opinion flint the syaterr of double Government l;y Governor am Ministers has resulted in evil to both race of her Majesty's .subjects in New Zealand He recognises the right of the Home Government la insist upon the maintenance of this system so long as the colony is receiving the aid of British troops for the suppression of internal disturbances: Ik is prepared to accept the alternative, and will recommend the Assembly to request the Home Government to withdraw the whole of its land force from the colony, and to j\<huc such instructions to the Governor as may enable him to be guided entirely by the recommendations of his Constitutional Advisers, excepting only upon such matters as may directly concern Imperial interests and the prerogatives ol the Crown. "Mr Weld is aware that the Governor, before taking action upon a proposition which would change the whole aspect of the relations between the mother country and the colony, may probably feel it his duty to ascertain the views of bur Majesty's Home Government. He would therefore, pending their decision, recommend that the Colonial Parliament should undertake a reasonable liability for the service< of troops uctively engaged in the field at the especial recommendation of lih- Excellency's Ministers,' and for such troops only. •' ' '•Mr Weld would recommend that a small standing colonial force be kept on foot, armed and trained with .special reference to the nature of the service required." These propositions were laid before both Houses of the Legislature during the ensuing session, and Ministers, in advi-ing his Excellency the Governor during the recess, have carefully kept in view this cardinal feat urn of their policy. On taking office, they" found districts somewhat adv meed and difficult of defence in the occupation of the Imperial troops and of militiirv settlers. ft would have been impossible to withdraw from any of these position* without a confession of weakness, and risk of consequent disaster. They also found the s'.-ttlements of Wiinganui and Taranaki in a position of difficulty and (lunger.—and between them a district which was the rallying point of disaffection and the nursery of fanatical propa»andisin. Ministers at once advised his Excellency the Governor to issue the Proclamation of December 17th, IHG4. Their policy was, not to continue ng^res-ive warfare, but to settle the country already held by the troops ; to identify the friendly natives as iar as possible1 with their European fellowcitizens, by the issue of Crown grants and certificates to them for land, and by mea sures generally calculated to improve the condition of the native race; to open the country by roads as occasion might serve; and to secure the safety of the settlements of Taranaki and Wanganui by making a road, and by securing a military post" or posts in the intervening hostile districts. Ministers believe the success of their policy to depend upon the willingness of the European settlers, and of those natives who live amongst them, to come forward In self-defence, aided, for a time at least, by an armed constabulary force under the direction of the Civil GoVernmcnt. They are of opinior,, that the Province of Auckland, for instance, having a population of about 42,000 inhabitants, besides a very large proportion of friendly natives, ought to be in a position to ward oft any attack from the comparatively small and badly armed force which might^be brought against it. Ministers are aware that disasters to settlers in exposed positions may at times occur; but such disasters have not been prevented by the presence of Imperial armies—nor could they, were those forces doubled. Ministers do not overlook the fact, that the permanent peace and safety of the colony can only be secured by a course of policy which shall guarantee to our fellowaubjocts of the native race civil rights, and at the same time bring them under the control of law. It is then proposed, with the sanction of the General Assembly, to establish an armed constabulary force, to occupy defensive posts, to be supported, as occasion may require, by friendly natives, by volunteer bushrangers and cavalry corps, all of which have hitherto done excellent service ,• and, in ci.se of emergency, by the whole militia of the district. It is submitted, that a force ol the nature proposed has been proved to be more effective, for the special purposes required in New

( Zca'und, than large armies organised with a view to European warfare. Such a force at least, may, It is hoped, be within the ! reach of the colony: The possession of it would entail no liability to interference in the management of onr internal affairs; whilst, on the other hand, New Zealand has neither the means nor the deeire to retain an Imperial army. Ministers advise the reduction of the Imperial force in New Zealand, and believe that with the assistance of the Imperial authorities, a few months would enable them to supply, as far as necessary, the place of all the troops now present in this country. It is intended that the proposed force shall consist of:— Euroneinu 1350 Mauris 150 Total 1500 j It is hoped that the European portion may be obtained from the Regular troops, permission having been asked from the Home Government to allow enlistment from regiments now servinc in New Zealand. Should that permission be refused, the men will be enlisted from other sources, o- The force will be divided into 30 comic panics, of .50 men each, and distributed as of shewn below, with such alterations from as time to time as cirenrnstances may render ;is advisable. a> 1 On the Hue of communication le flora the Queen's Kcdoubt Foatliwarrl, ai.il b- tw en the ,„ Waiknto and Waipa rivers .. Q Companies. 2. On the Jinc of the Wnikato "} river, from Ihe 131uft*,orQa&-n's il Kedoubt, to t'ukorokoro, on the (1 Pfitli of the Thames 3 „ [ c 3. In reserve at Papakura and neighborhood 3 4 At Tauranga 1 n c Totnt in Provfnce of Auckland 13 Companies. - 5. In the Taranaki and Wanpay nui districts, c-x»«-niiinK from a the North of the Waitara river to tho Waitotara river .. 12 Companies. G. At We iiiifjtoa 1 c Total in Provinces of Tara»aki and Wellington 13 Companies. y 7. At N;ini«r, Province of Hawks'* Bay 4 Companies. i The force will be armed and trained with 1 a special view to the service required. h About one-tenth of the men will be raonn- . ted, part trained as Artillery men, and the - whole taught to ride. j It ia proposed to post the detachments - in good natural positions, with the view of ; forming centres round which the popula- ; tion on the frontier may rally in times of I danjjer. The reserves will occupy central !: positions. ; In addition to the Constabulary force, , Ministers propose to maintain one small . steamer, for service upon the Waikato, [ and to visit occasionally the Patea and i "Wanganui rivers. In considering the question of the internal defence of the colony, it must be ' borne in mind that in addition to the ordinary Militia and Volunteers, numbering 01G5 men in the Northern Island, there are upwards of 4000 settlers who hold their laud under a rjnusi military tenure. Of these, some at least are liable to serve for t lie next eighteen months in any part of the Northern Island of New Zealand. In the Waikato district, the location of these : men upon their farms lias commenced; i but the large majority of them are still on [iay, and Ministers propose to retain on : pay a sufficient number to garrison the necessary posts until the Constabulary i force is raised. The following financial estimate will i shew, with sufficient accuracy, the annual amount to he provided : — Con =iibnlarr /■"<;.; tt (<ay) 1.710 men... £127 000 Miiu. -md Volunteers 30.UUU Srwi'i ■ r 5 000 C 'iitii 2-i,GCO £187 000 It is thought that there will be no difficulty in obtaining the requisite number of men from the regular troops, at the rate of Is Gd a day pay, with rations and clothing. Upon this the foregoing calculation is based; but should the men be enlisted from the civil population, the sum of £.59.000 must be added to £187,000— making the total £240,000. Ministers here observe, that it is an indispensable condition of their proposed plan, that the whole colonial force should be under the absolute control of the Colonial Government. In submitting these plans for providing for the internal defence of the colony upon the withdrawal of Her Majesty's land forces, Ministers desire at the same time to point out the means which the colony has of giving effect to these plans, as well as the limits within which it is necessary to confine their military expenditure. 11' a stop is put to the present war expenditure, the colony will, as Ministers believe, be able to bear the charge they propose to undertake, but not otherwise. At the present moment, indeed, they are dependent on advances from their bankers lor the means of providing for current expenditure. They owe their bankers, on an overdrawn account, upwards of L' 250,000, which it is intended to repay by sale of colonial securities ; but as yet they have been unable to find a sale for them to any considerable extent. Ministers have made, as they believe, arrangements which will enable them to take advantage of any improvement in the London money market, but they wait advices from London. Meantime they are in peril, at any moment, of their bankers refusing to meet their current payments. j This state of things, though full of anxiety and difficulty, is, however, as Ministers hope and believe, only temporary. The remainder of the Three Million Loan of 1863, bearing an increased rate of interest at G per cent., and the One Million Short-dated Debentures authorised to be raised in anticipation of such loan, will, no doubt, in due time find purchasers in the London money market. The Loan Account may then, in round figures, be stated approximately thus:— Kaisj'l and expended by the late Government £1,000,000 Transferred to the Imperial Government on account of clnims ... 500,000 lit quired to repay overdraft to bankers, including interest, &« 300,0C0 Repaid Debentures of 1*63 .. 100 000 Paid Turanaki Compensation Claims 180 000 Outstanding Account, Sundries to present time, say 100,000 j £2,120,000 To this must be added, foi construction of roads, The current expenditure, at the rate of nearly LGO.OOO per month, cannot aud-

denly be arrented, even by the most energetic measures for that purpose. It is impossible to make an approximate estimate of what this may amount to. Still, by stopping the present war expenditure as speedily S3 possible, and with i some temporary assistance from the Impe--1 rial Government, enough may, it is hoped; be saved out of the Three Million Loan to provide, say, for a period of five years, for the extraordinary charges of internal defence now proposed to be undertaken. If the present expenditure is suffered to go on, and the loan is thereby exhausted, as it rapidly will be, Ministers have no expectation that the colony will be able financially to assume the charge of its internal defence within any assignable space of time. It may be hoped that at the end of, say, five years, the extraordinary charges of internal defence now proposed may cease to be required, and the colony resume what may be termed its normal scale of expenditure; but this is obviously dependent on conditions which must be uncertain. Ministers can only make calculations founded on probabilities. In the foregoing estimate nothing has been taken into account as receivable from sale of land. It may be that portions of the confiscated block may be avoilable for sale after satisfying the claims of Immigrants and Millitary Settlers, as well as of friendly natives, and rebel natives who may come in in accordance with His Excellency's Proclamation. But these claims must be satisfied in the first instance on a liberal scale, and iio considerable immediate relief to our finances can be expected from the residue which may be open for sale. Of the proceeds thereof the Colony must satisfy claims for compensation to Natives and others for lands taken for Military Settlements, the expenses of immigration, location of settlers, surveys, and a variety of other charges which will, in the opinion of Ministers, be barely covered by any amount which can be expected to be at once realised from the sale of land. Jt may be said lh.it by increased taxation, on the one hand, and rigid economy, on the other, the current revenue may supply means for providing for the internal defence of the colony r It must, however, be borne in mind, that the ordinary expenditure of the colony is, or will be shortly, burdened with interest on loans to the amount of nearly £200,000 a year. Ministers have already raised the Customs Tariff to the extreme limit which can be borne. Indeed, tbey may be obliged to diminish it in order to avoid smuggling, for which the present high rate of duty upon some articles offers great temptation. They have under consideration other kinds af taxation, but it must not be expected that these will make a sensible iucrease to th" revenue. Assuming then the revenue not to he capable oi increase excipt to a moderate extent, can the ordinary expenditure be perceptibly reduced ? This question can only be answered by those acquainted with the circumstances of the colony, and Ministers fear that no perceptible reduction of the ordinary civil expenditure is practicable. In elucidation of tlm point, Ministers transmit a copy of the Estimates for the years 18G3-4 and 18G4-5, together with the copy of the statement made in the House of Representatives in 18G4, by Mr Fitzherbert, the Colonial Treasurer. But it may be said that the General Government ought to avail itself of the whole of the ordinary revenue, without allocating to the service of the Provincial Governments (as at present) three-eighths of the customs, which has been wrongly termed "surplus revenue." This again is a question which cannot be rightly understood except by persons acquainted with the local circumstances of the colony. It is true that upon the face of the Estimates there is au apparent surplus of ordinary revenue, which goes to the provinces. The Provincial Governments are thereby enabled to curry on various departments of the public service, the charge of which would othcrwisj fall upon the General Government. The provinces pay, in fact, the bulk of the local expenditure, the local ndiriinistration of justice, police, the maintenance of hospitals, gaols, and the like. Apart from all political considerations, and without touching upon the consequences which would result from destroying the present Provincial establishments, in point of economy the General Government would save little or nothing by taking upon itself the charges now borne by the Provinces, as of course it must do, should it take to itself the whole revenue. By degrees the Provinces are making provision fur some of their present charges by municipal taxation. By this means it mny be hoped, that the ordinary revenue of the colony may eventually be considerably disburdened. But no sensible relief can Jbe expected at present, from this source, to the colonial finances. It may be said that the territorial revenue ought to be made available towards the war expenditure,1 that i.«, that the territorial revenue of the Middle Island (which alone is of considerable amount) should be taken to pay for the internal defence of the provinces of the Northern Island. It would be needless to discuss such a proposition, which would be simply impracticable. It would be in breach of solemn engagements entered into between the respective Provinces, and would defeat the rights of Provincial creditors, who have lent money to the Provinces, upon the faith of existing arrangements. But, independently of this, such a diversion ol the territorial revenue would simply destroy the revenue itself. A large price, for instance, i 3 given by purchasers ol land in Canterbury, under a system according to which the proceeds of the land sales are laid out reproductively upon immigration, roads, and public works. Should the land fund be no longer applied to those objects, the reason for exacting a high price for land ceases, and land will probably be given away at Canterbury, as in Auckland, by wayofencouragementto immigrants. According to all true principles of Colonial economy, the money raised by sale of Waste Lands should be applied to objects calculated to give value to the land. Upon that principle the Colony has hitherto proceeded in reference to the disposal of its waste lands and land funds, and it will not voluntarily depart from it. It follows that the expense of the future internal defence of the Colony, according to the plan proposed by Ministers, must for the next few years be mainly provided for by loan ,• but it can only be done by

now stopping all the present war expenditure. Ministers, therefore, propose at once to take the necessary steps for this purpose, and to direct all their measures towards the object which they have in view; Independently of economical considerations, they believe this to be the wisest course which they can take. They believe that by at once facing the danger which lies before them, they may diminish it. It will in fact be safer at once to withdraw the troops from the Waikato, placing that district in a posture of selfdefence without reliance on the presence of troops, then to go on from month to month, or year to.year, inevitably weakening in the settlers those habits of selfreliance on which they will be compelled to fall back at last. The same may be said of each of the other districts, particularly as regards Taranaki and Wanganui, so soon as military operations in those districts are brought to an end, which, as Ministers suppose, may now be done in the course of a few weeks. Ministers assume as a fixed condition of these proposals, that the Colonial Government will receive the firm and unwavering support of the Imperial Government in maintaining the unity of the Colony with its Seat of Government established, as at present, in a central position. FnEi>. A. Wem). Wellington, March 20, 1865. ( To be continued.)