E—No. 1 Sec. 11.

£ s. d. A demand has been made by the Imperial Government, and accepted by the Colonial Legislature of £5 per head for every Officer and Man quartered in New Zealand since Ist April, 1858. This demand to 30th June, 1861, amounts to - - - 39,108 0 0 The estimated annual expenditure on the above account, reckoning the Force in New Zealand at 5,000 men, is - - - - 25,000 0 0 A further demand has been made, which has not been accepted by the Legislature, for Lodging Money and Colonial Allowance, which may be estimated at, per annum - .... 25^000 0 0 A Gratuity last year amounting to £4000 was given from the War Loan of £150,000 to the Naval Forces, and another Gratuity this year is to be given, the amount in the first instance to be advanced from the Commissariat Chest under guarantee of repayment by the Colony - - 5,000 0 0 The Militia Expenses are now going on at the rate, per annum, of - 40,000 0 0 The expenditure incurred in the maintenance of the Taranaki Eefugees amounts at the present time to .... 14,234 0 0 Demands from the Commissariat for advances on account of Militia Pay, for Arms, and a variety of incidental expenses to 30th June, 1861, amount to 105,000 0 0 Upwards of £30,000 have been already paid out of the £150,000 War Loan for Rifles, and a further expenditure on the same account, but not from the same source, has been authorised of - - - - 15,000 0 0 There are also to be taken into consideration the Losses incurred by the Taranaki Settlers, which have been estimated at £200,000, and towards the relief of whom out of the £150.000 Loan has been voted - 25,000 0 0 It will be seen, then, that independently and apart from the War Loan of £15,000, demands are made upon the Colony, and liabilities have been incurred, to the amount of upwards of £200,000; and an annual expenditure is now going of about £80,000 for War purposes; which it is utterly impossible* that the Colony can meet out of its Ordinary Revenues, and which, if it continue much longer, and payment be rigidly exacted by the Imperial Government, must eventually end in the ruin of the country as a British Colony. It is hoped that the Imperial Government will take a broad and liberal view of the whole question; that whilst the Colony on the hand is willing to pay to its utmost whatever amount can be fairly charged upon it, and especially recognises as its duty the complete arming and training of its inhabitants; yet on the other hand the Imperial Authorities will see that so young a Colony as New Zealand cannot bear burdens beyond a certain point, without involving itself in financial difficulties which must be succeeded by a state of affairs approaching bankruptcy. The course which suggested itself to the Government, and which was accepted by the Legislature as the only practical plan which could at the present time and under existing circumstances bo followed, was, not to attempt to meet these various demands or to provide for this excessive expenditure at present, but to wait until the existing Native difficulty /was removed; to ascertain with accuracy what proportion of the expenses the Imperial Government would—after due deliberation and a full knowledge of all the facts of the case —charge the Colony with; and then to apply for a Guaranteed Loan, extending over a period of years, varying of course with the amount which this country would be called upon to pay. Treasury, Auckland, Reader Wood. 27th September, 1861.

No- 17.

No. 8. COPY OF A DESPATCH FROM GOVERNOR SIR GEOEGE GREY TO HIS GEACE THE DUKE OF NEWCASTLE. Government House, Auckland, 2nd November, 1861. My Lord Duke,— I have the honor to enclose to Your Grace a Return of all Pensions given to Native Chiefs in this Island from the year 1846 to the present date, shewing the names of the several Chiefs, and the amount paid to each. 2. It will be found that up to the date of my formerly quitting these Islands, pensions had been paid to only six Chiefs. 3. Timotiu and Wi Waka had each been severely wounded in action in Her Majesty's service—the former of them had both eyes shot out. 4. The remaining four Chiefs—Tamati WakaNene, of the Bay of Islands; Te Whcrowhero, of Waikato; Hori Kingi, of Whanganui; and Te Puni, of Wellington; had each rendered many and faithful services to the British Crown. 5. During my former long administration of affairs here, the largest sum paid in pensions to Natives in any one year was £187 10s. Od. In the year 1860, £755 was paid in pensions to fourteen Chiefs. lam anxious that these facts should stand on record, for during my absence from New Zealand I have frequently seen it stated that I had gained a great personal influence over the New Zealand Chiefs by giving them large pensions. I have, &c, His Grace the Duke of Newcastle,, K.G., G. Grey. &c, &c, &c.

Return enclose

18

DESPATCHES FROM GOVERNOR SIR G. GREY