B—No. 7

4

MILITARY EXPENDITURE.

(No. 5752.',

Enclosure 1 iv No. 2. SIR T. TKEL TO THE DEPUTY COMMISSARY GENERAL, NEW ZEALAND. Treasury Chambers, 13th June, 1862. Sir, — I am directed by the Lords Commissioners of Her Majesty's Treasury to acquaint you that my Lords were obliged to postpone any answer to your letters of the 23rd August, and 6th September last, pending the consideration of Her Majesty's Government, of the general question of the claims upon the Colony of New Zealand, ou account of charges for .Military Expenditure during the late war. I am, however, to state that, my Lords entirely approve of the manner iv which you have discharged your duties as Controller of the Treasury Chest, in relation to the claims upon the Colony, and I am to transmit for your information aud guidance, extracts from the Treasury minute of the 24th May last, on the subject of those claims. You will observe that Her Majesty's Government have agreed to the diversion to local objects during a term of three years, of a portion of the Military contribution, at the rate of £5 per man, which the Colony is under engagement to pay to the Treasury Chest in aid of Military Expenditure, and it will be your duty to require au account of such temporary application of part of the fund iv question, and to claim payment of the balance thereof according to the amount of Military Force in the Colony. You will also observe that the aid to be afforded from Imperial resources is to be confined to a waiver for a time of the full claim upon the Colony in respect of the Military contribution, and that you are not authorised to make any payment direct from the Treasury Chest (by way of loan or otherwise) to supply any deficiency of Colonial funds for carrying out the scheme for tlie pacification of the Native Districts proposed by Sir George Grey, or for any other Colonial purpose. I am, &c, F. Peel. D. C G. Jones, Commissariat, New Zealand.

Enclosure 2 in No. 2. Extracts from Treasury Minute dated 24th May, 1862. " Write to Sir F. Eogers for the information of the Duke of Newcastle that, on full consideration of the difficulties with which the Governor of New Zealand has to contend, my Lords arc of opinion that it would be wise policy on the part of Her Majesty's Government to allow him much discretion in working out the scheme which he has proposed for the pacification and government of the Native Districts, aud that, although he has assumed to himself tho disposal of funds belonging to the Imperial Government without authority, it would be inexpedient to incur the responsibility of hampering his operations by requiring the present fulfilment of the engagement of the Government of New Zealand for the very moderate contribution of £5 a head for the troops employed in that Colony. Their Lordships on these grounds concur in the proposal of the Duke of Newcastle, that Sir George Grey should be left at liberty to apply such portion of the money, which will be due to this country during the next three years on account of that contribution, as may be required to complete the funds required for carrying out the proposed scheme. " The despatch of Sir George Grey does not afford accurate data from which the amount of the aid to colonial funds to be derived from this source can be conjectured. "He appears to estimate the total expenditure to be ultimately incurred for his plan at £50,000 a year, and he proposed to apply towards the expense the sum of £26,000 at present appropriated from colonial revenues ' for Native purposes.' " The understanding, therefore, on which my Lords consent to an appropriation of a portion of the military contribution for three years towards the expense, is that the sum of £26,000 shall first be expended from colonial funds, and that such additional funds as may be required during the said limited term may be supplied from the contribution. It is unnecessary to define the amount to be derived from the latter source, because, on the one baud, the amount of the whole of the fund iv question depends in each year on the nu.nber of troops retained in New Zealand; and on the other hand, as my Lords consider that the whole responsibility of the scheme for the settlement of the Native Provinces should rest with the Government of New Zealand, it does not appear to them to be desirable that Her Majesty's Government should attempt to limit the total expenditure to be incurred for the purpose. The sole conditions to be insisted upon are that the aid from Imperial sources should be restricted absolutely to a sum within the amount of the contribution to the extent which may be required after the expenditure of £26,000 from colonial funds, and thut such aid shall not be continued beyond a term of three years.