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" Scholars may be maintained in the country at one-third or one-half the sum which they cost in Auckland." To this I may add that schools in the immediate vicinity of Auckland cannot assume an industrial character, and therefore cannot be expected at any future, time to become self-supporting. I shall now advert to the distribution of funds among the Native Schools. With the abstract question, whether state aid ought to be granted to various denominations, and to how many, Ido not consider myself at present concerned. I assume, for the purpose of this report, that assistance will be continued to them. It appears desirable, for reasons so well known that there is no need of making further allusion to them, that the subsidy to the schools should be removed from the Civil List, and provided for by vote of the House of Representatives. But it is also desirable that the managers of the schools should be able to depend upon receiving the subsidy for a certain time, —that they should not have to fear, in any session, an adverse vote in Committee of Supply. I therefore propose that the subsidy should, for a certain number of years, be made a permanent charge. A term of ten years would probably enable the managers to place their establishments on a stable footing, leaving the question open whether Government aid should be continued after that period. But I think that the payments might be altogether discontinued within a shorter time, and without injury to the country schools, by the means which lam about to propose. Those schools are of an industrial character and are endowed with landed property, which, however, for want of capital, is not nearly so productive as it might be made. If the farms were improved, and properly cultivated, the establishments might be rendered self-supporting. And I think that the period of the annual subsidy might be safely shortened to seven years, with an intimation that it would then be certainly withdrawn : provided that an additional bounty sum be immediately given to each of the country schools, strictly to be expended in the improvement of the farms attached. The advantages of Model Farms in Native districts are too obvious to need further notice. The Government might also confer a great benefit, not only upon the Schools, but also upon the Native race, by procuring for them a small number of really high bred stock, —homed cattle, sheep, and swine, for the purpose of ameliorating the breeds. The unequal distribution of the government aid among the various denominations has been already pointed out to you by my fellow-inspector, Colonel Russell. But I do not entirely agree with his statement of the case. Ido not think it can be fairly said that the Government allow for the scholars a large sum per head to one denomination, and a small sum to another. For each denomination, under the present system, remains at liberty to exercise opinion whether it is better to give a more perfect education to a lesser number of scholars, or a less perfect education to a greater number. My own impression is, that at St. Mary's and St. Anne's the funds are too much concentrated, and that in the Waikato schools they are too much diffused. But I speak with hesitation as to a point which the Managers of the Schools can alone be competent to decide upon. A remedy has been proposed for any presumed inequality of distribution, namely,—equal payments per head for the Schools, —say £10; allowing one half or one third more for the central schools, in consideration of the increased expenses of maintenance. I cannot absolutely gainsay this mode of payment, but I think it my duty to point out certain difficulties in practice which I do not clearly see how to surmount. If the Government had an unlimited sum at their disposal, one great difficulty would be got over; for aid could be extended to any number of scholars. But the sum being limited in amount, there would be a race among the denominations which should first exhaust the general grant, each for itself, leaving nothing for the rest. Possibly, this difficulty might be avoided by the voting of equal sums, to be set apart for each denomination, but left at the disposal of the Government. The amount to be drawn by each denomination, within the limits of the grants, might then be made to depend upon the number of scholars, the calculation being made according to a fixed scale. I mention, with some unwillingness, another difficulty bearing upon payment at per head,— the temptation thereby afforded to take undue means of increasing the number of pupils, or to send in unfair reports ; a danger, I admit, which is scarcely to be apprehended, from the known character of the present Managers of the schools, but still one which it is the duty of a provident Government to guard against. To meet this difficulty, the provision which most naturally occurs would be the appointment of permanent, and therefore salaried, Government Inspectors. But it would be necessary, in that case, to appoint an Inspector for each several denomination, thus entailing a very largely increased expense. For, although I have myself been received with the greatest cordiality by all the denominations alike, my own Inspectorship being merely a temporary appointment, I very much doubt whether the Church of Rome, for instance, would acquiesce in the permanent appointment of a Protestant Inspector, or whether the Church of England would rest satisfied with a Roman Catholic Inspector. In regard to the general management of the Native Schools, much difference of opinion appears to exists On the one hand it is argued that the Schools ought, as nearly as possible, to be localized ; i. c., to be secured from the interference of any superior authority, trusting implicitly to the energy and discretion of the respective managers, to whom, it is further contended, the Government subsidy ought to be paid directly from the Treasury, and not through the medium of any central Board.