IMPORTANT CORRESPONDENCE BETWEEN THE HOME AND COLONIAL GOVERNMENTS.

Otago Witness, Issue 666, 3 September 1864, Page 8

IMPORTANT CORRESPONDENCE BETWEEN THE HOME AND COLONIAL GOVERNMENTS.

(FROV OUR WELLINGTON CORRESPONDENT.)

Copy or a Despatoh from thh Right HONOBABLB >DWARD CARDWELL, M.P., w GoysRNOE Sib GfioEeß Grey, K.C.B. Downing-street, May 26th, 1864. Sir -I informed you in my Despatch, Ho. 43, of 26th April last, that I should request the Law Officers of the Crown to furnish me with their opinion respecting the competency of the New Zealand Lefjislature to pass the two A.cts, No 7, the Suppres<ion of Rebellion Act, 1863, and No. 8, the New Zealand Settlements Act, 1863. This I have done, and I am advised that there is in their judgment no reason to doubt the legality of the former of the two Acts, and that the only reason for questioning tiie legality of the latter arises from its repugnancy to the third section of the Imperial Loan Guar mtee, 20 and 21 Viot., c. 51. 1 intend to submit to Parliament, in connection wibh the contemplated loan, a provision calculated to remove this doubt. I enclose to you the copy of a letter which, by my desire, has been ad Iressed to Mr Reader Wood,, and which will explain to you the views of her Majesty's (Government, in respect to the proposed guaranteed loan I am only induced to make this offer to Mr Reader Wood in the full conviction that the recent military successes, improved by a justj ust and temperate policy on your part, will lead to a spre ly and permanent pacification of the Northern Island.

I have stated to Mr Reader Wood that his acceptance of this proposal will be regarded by Her Majesty's Government as convejing on bis own part nnl that of his colleagues an assurance of their desire cordially to co-operate with you ia a just and temperate policy towards the native race. On the part of Her Mnj3=ty's Government I need not repeat the instructions which were fully conveyed to you iv my Despatch No 43 of 26th April last.

I entirely anticipate that your Ministers will be animated by a jast sense of 'the exertions and sacrifices which have already been made by the mother country for the Colony, and that on Colonial grounds they will be as anxious as you can be yourself to terminate the present hostilities.

But it is ray duty to say to you plainly that i* unfortunately their opinion should be different from your own ns to the terras of peace, Her Majesty's Government expect you to act upon your own judgment, and to state to your Ministers explicitl/ that an army of 10,000 English troops has been placed at your disposal for objects of great Imperial concern, and not for the attainment of any merely local object ; that youv responsibility to the Crowu is paramount ; and that you will not coitinue tlie expenditure of blood and treasure longer than is absolutely necessary for the establishment ot a just and eaduring peace.

I have, &c, (Signed) Edward Cardwell. Sir George Grey, X.C.8., &c, &c, &c.

(enclosures.)

Downing street, 26fch May, 1864. Sir — I have the honor to inform you that Mr Secretary Cardwell has considered the application which, as Finance Minister of the New Zealand Government, you have made to him, viz., that he wiil propose to Parliament that the intended loan of three millions, authori-ed by the recent Act of the New Zealand Assembly, should be raised with the assistance of aa Imperial guarantee.

Mr Gardwell has desired me to express his regret tbat he cannot un fertake to make to Parliament any such proposal, nor doe? he think that such a proposal could be made with any prospeci of its beina: approved and adopted by Parliament, He is fully pre Dared, however, to consider the claims of the colony to a guarantee of less amount.

In a despatch addressed to Sir George Grey, on the 26th December last, the Duke of Newcastle expressed his readiness on the conditions there set forth, to submit again to Parliament the proposal tor a guaranteed loan of L50t),000 which has been already submitted towards the close of the previous session, but had been withdrawn because Mr Crosbie Ward, when acting for the colony, had not, determined on accepting the terms offered till the opportunity for legislation had been lost. Since it apnears to me to be the wish of the'colony that this arrangement should proceed, and certainly the altered circumstances do not enable the colony to dispense with any assistance which it require 1 when that Bill was introduced into the House of Commons, the Secretary of Stite is still ready to proceed with it, at your request. The arrangement as then made provided for a payment to the treasury of a sum of L 200,000, which was to cover the amount of debt then due to the home Government. But the terms on which the Lords of the Treasury were prepared to concur, comprised a stipulation that provision should be at once made fur repaying all advances upon the treasury chest, with interest, at the rate of four per cent on such as had remained unliquidated for more thun three months. It now appears that advance? have been made, either in money or in arms and stores, amounting to somewhat short of L3ol>,Goo, and thus raising the total debt to the Treasury to a sum approaching L 500.000. '

If her Majesty's Government are to submit to Parliament, a propo-al for aiding the colony by au Imperial guarantee, the first condition would be that out of the money bo borrowed by the colony the whole debt due to the mother Country shall in the first instance be discharged. It is evident therefore, that if the guarantee be limited to five hundred thousand pounds, so large a portion will be absorbed by the debt to the Treasury that scarcely anything will remain to be applied either to the other purposes contemplated in the original bill, or to the liquidation of the great subsequent expenses which have been or wIII be incurred by the colony. It is estimated by you that those expenses up to the end of the present year will amount to nearly eleven hundrel thousand poaads, or, excluding the debt to the Home Government, to nearly eight (eighteen 1) huadred thousand pounds. Mr Cardwell acknowledges the] force and weight of many of the considerations which have been urged by you as reasons why the colony should resort to a loan for expenses which in the mother country would be discharged, in part at least, from current revenue, such as the tact that the whole population of the province of Auckland from 16 to 55 has been drawn away by the war

from industrial pursuits ; t lat the Southern Island, having a less immediate interest in the suppression of the rebellion, would feel the charge upon the annual revenue aa a serious hardship ; that the colony is compelled on the return of peace to make lar£e payments both for military purposes requiring to be wound up and discharged, and also for prospective measures of improvement, consequent upon the return of peace, without being able to apportion that ex peaditure to its present means, or to wait for the most favorable state of the market to bring out a loan. Mr Cardwell also feels that the prosp«ct of avoiding future disturbances, win all the accompanying evils and expenses both to the colony and to the motner country, will much depend upon judicious andlcomprehensiye measuiesto betaken at the time of the restoration of peace, and that an embarrassment in the finances of the colony at that juncture would tend to prevent the accomplishment of th.ise measures and to cloud thit prospect- Yet notwithstanding these considerations, he is not prepared to recommend to Parliament a guaranteed loan to any such amount as that which you have .requested of her Majesty's Government.

Upon tbe wlnle, Mr Cardwell concludes, that the guarantee orginally promised by the Duke of Newcastle may again be submitted to Parliament, and that the ffmount may be increased by the sum due, and to be repaid to the Imperial Treasury, and by a further ?ura of about L 200.000, to be applicable to the general purposes of the New Zealand Government. The whole sura therefore, to be guaranteed will amount to onemillion ; of which, as far aa at present appears, somewhat less than half will at otice be repaid to tbe Imperial Exchequer and somewhat more than half will be applied t3 purposes of the colony, for the pacification of tbe North Island, and liquidating the expenses of the war. This should be raised at a rate of interest not exceeding 4 per cent., with 2 per cent, for sinking fund.

The actual ordinary revenue of the year 1862-3, amounted to L 549.963, which exceeded bj L 259.296 the necessary expenses of General Government. The revenue of the colony has hitherto rapidly increased, smd is estimated for the ourreut year, at 1,691,600; and the whokofthis reveDiie with its prospective increase, is to be the security for the loan.

Mr Cardwell thinks that this security is sufficient, and excludes the ri'k that any actual payment will fall to be discharged by the Imperial Treasury. He leaves out of consideration the land pledged by the Act of the Assembly, which he cannot regnrd as adding anything definite, or certainly and immediately available in the way of security.

I am directed to observe, that Mr Card well makes this offer (o you as the Finance Minister of New Zealand, in the confident expectation and belief tlut the recent successes of the Queen's forces, and of the Colonial Militia and Volunteers, will have placed in the Governor's hands the power of securing a just and permanent peace , and that his own disposition, and the instructions which have bsen addressed to him from thi3 department, will insure his using that power for the early termination of the war. It is only under this conviction that the Secretary of State can undertake to submit this proposal to Pailiament ; and if the proposal be accepted by you, your acceptance must be understood a* conveying on your part and that of your colleagues iv the Government of New Z-a land, an assurancs of their desire cordially to cooperate with the Governor in this jnafc and temperate policy towards the native race. It only remains that, at Mr Cardwell's direction, I should stats the views of her Majesty's Government with respect to the future relations between the mother country and the colony in respect of military expenditure. Hitherto the contribution of the colony has been merely nominal, being only 1 5 per nnn, which recently has not been paid in the J mperial exchequer, but almost entirely employed for native purposes in New Zealand. Her Majesty's Government feel themselves imperatively called upon to provide, that if, under the New Zealand Government, to whom in ordinary times, the management of native affairs now almost exclusively belongs, the colony shall ag un be involved in civil war, | the whols expense of the troops engaged in that war shall not fall upon the mother country. They acknowledge that New Zealand differs from the Australian colonies iv this respect, viz , that the presence of a large native population renders necessary the presence of some military force even iv times of peace. This force they propose to fix at one legiment, and for that one regiment they do not propose to chirge the Colony of New Zealand with the amount which it is proposed to charge upon the Australian colonies. They will expect that in consideration of this one regiment being maintained at the charge of the Imperial Treasury, the colony will continue to devote the sum. of L 50,000, per annum, to native purposes of the nature indicated in Sir George Grey's Despatch of the 6th December, 1861, including the Government o' native districts, and the moral and material advancement of the native race, but exclndinpr the maintenance of any military ov semi-military force for the suppression of disturbance. For every soldier over and above thi3 one regiment, Her Majesty's Government will expect the Colony to pay iv future the same amount which has been proposed to the Australian Colonies, viz. : the sum of L4O, for every infantry soldier ; and L 55. for every artilleryman. These measures they regard as just measures of "security against the risk of war being iucurred by Colonial policy, while the principal expenses would fall to be discharged, not by the Colonial but the* Imperial Treasury.

This arrangement should commence at the termination of the present arrangement, viz. : at the close of the present year ; but as it is not possible that the large army now in New Zealand can be altogether removed from the Island before the first of January, 1865, they will so far delay the period of its application, as to agree that in the year 1885, it shall not be applicable to any force beyond 4000 men, in addition to the one regiment, which ia t"> be maintained at the exclusive cost of the Home Government

Arrangements of this kind must of course be subject to revision hereafter, especially in a Colony like New Zealand, where a few years may bring with them a very altered, state of circumstances.

The whole arrangement, therefore, may be thus snmmel up: — 1. That the original guarantee be extended from half a million to one million, of which, probably, rather less than half will be paid into the Imperial Treasury, and the remainder will be applicable to the purposes of the colony. 2. That after allowing for one regiment, New Zealand shall pay to the Imperial Treasury the

same contribution as that which it is proposed that the Australian colonies shall pay. 3. That inasmuch as the mother country fuvnishes one regiment, in consideration of the many circumstances connected with the presence in New Z aland of a large native population, the sum now paid out of colonial funds, for the especial benefit of that population, viz , L 50,000, shall continue undiminished.

■ 4. That New Zealand shall not pay more than 4000 men in the year 1865. I am, &c, „ , _ , _ (Signed) F. Roger*. Header Wood, Esq., &c, &c. Westminster Palace Hotel, London, 28th May, 1864. Sir I beg to acknowledge the receipt of* your letter of the 26th instant, in which you state that Mr Secretary Cardwell will submit to Parliament, at my request, a proposal to guarantfie one million of the loan sanctioned by the New Zealand L»gtslahire, upon the following con> ditions :— l. That out of the fuada borrowed by the colony under the guarantee of the Imperial Parliament, all debts due to the mother country shall be discharged. 2. That a proposal to guarantee any portion of this loan can be Submitted to Parliament by Mr Cardwell only under an assurance from me that the Colonial Government desires cordially to co-operate with the Governor of New Zealand in that just and temperate policy towards the native race, which is believed to be in accordance with his Excellency's own : feelings, and which ia embodied in the instructions which have been addressed to him by Mr Card well, under date 26 rh April, 1864.

With retard to the firat of thsse conlitinns, I agree, immediately upon the funds being raised, to repay to the mother country all debts due, amounting, as far as van at present be ascertained, to something '.ess than L 500,000.

With reference to the second, I take thig opportunity of stating formally and officially that which I have previously had the honor of stating to Mr Secretary Cardwell verbally, that there is nothing in the instructions of 26th April to Sir George Grey that does not represent the views of the Colonial Governmsns in practically carrying into effect the policy of confiscation authorised by the Legislature in the New Zealand Settlements Act.

It is quite true that the language of that Act is much wider than th it of the instructions, and the powers given under it are not limited, as they are by the instructions. It does not follow, however, because powers are given, that therefore they muat be exercised. It often happens that an Executive Government is by the Legislature armed with powers, whioli, under certain possible circumstances, may very properly be ex* erciaed, and that confidence is felt that under different circumstances those powers will remain unused. This was the case 'luring the last session of the Assembly in Ne.w Zealand. To account for the language of the settlements Act, and to justify its use, the state of affairs in tbe colony at the time that Act was passed must be considered. la consequence of the distance of the various settlements in New Zealand from each other, of the comparative difficulty of locomotion, and the f*ct that nearly all the members of the Legislature are actually engaged in business, it ia only at great personal inconvenience that a session of the Assembly can be held at a!!, and it is quite impossible, with short notice, to hold a session at which such a number can be present as fairly to represent the colony. During the last session the Government was anxious to be armed with all the powers they felt it necessary to have to enable them to meet any contingency that might arise. Wliat, then, was the attitude of the native population { _ At the time the New Zealand Parliament was in session a very large portion of the Waikato and the whole of the Taranaki and Ngatiruanui tribes were in a state of rebellion, wore actually in arms, and fighting against the Queen's authority ; a considerable number of the Southern tribes in the Province of Wellington were, though not in actual rebellion, in ft state of disaffection ; large numbers in every part of New Zealand were waiting on events ; and there can be no doubt, if we had met with reverses, or, if General Cameron had not achieved a success on the Waikato, many who are now peaceable would have joined the rebellion. Under tbeae circumstances, the Government felt that if they simply specified in the Act the districts then iv open robellion, and confined the powers of confiscating territory to such defined districts only ; that soon after the Assembly was prorogued, and members had gone to their home 9, it might become necessary and right to exercise the power of confiscation me st in districts which had not been included within the defined limits, because the native inhabitants were not in rebel* lion at the moment the Act passed. The Government never ha-'l any intention whatever of confiscating land in districts about which there would be any doubt as to the native inhabitants being in a state of rebellion. On my own behalf, therefore, and that of my colleagues, I can give to Mr Oardwell a full assurance that the local Government ysill cordially co-operate with Sir George Grey in carrying out that just and temperate policy towards the Dative race embodied in the New Zealand Settlements Act, aa limited in its operation, by his instructions of 26th April. In the concluding part of your letter you state the views of her Majesty's Government with respect to tbe future relations between the mother country and the colony, in respect to military expenditure. On my own part I state, unreservedly, that the proposals which are made, have my full concurrence; and that with respect to the charges for the expenses of the present war, they are made by Her Majesty's Government in such a spirit of liberality as cannot fail to command the gratitude o' the people of New Zealand.

I cannot, however, disguise from you the fact, that I possess no power from the General Assemby which will enable me definitely to conclude any arrangement with Her Majesty's Government in reference to military expenditure which will not require confirmation and ratification by the New Zealand Parliament. I need, however, hardly point out to you, that no assent of mine, under any circumstance, could afford to Her Majesty's Government so good a security as that which they hold in their own hands, namely, the power of refusing to send troops, excepting upon their own terms, or of recalling them if those terms are not satisfactorily complied with. I have, 81%, (Signed) Bbades Wood Sir F, Rogers, Bart,, &c , &c, &c.