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Many settlers and their families have left the place. During actual hostilities a large number of women and children were removed to Nelson. But many of them have returned. The ordinary industrial occupations of the settlement have been for the most part abandoned or suspended. The farms are in general left uncultivated, and much of the land is returning to the state of nature, and is being overran with Scotch thistles, and gorse from the fences, The farm houses and buildings, except close to the town, have been destroyed. The Ngatirnanui and Taranaki Natives remain in a state of passivo insurrectionary sullonness : —refuse submission to the terms proposed—retain possession of large quantities of tb,e settlers, stock carried off during the war—have stopped the mail though carried by natives—and threaten death to all Europeans who venture beyond certain lines, so that no one dare travel beyond a few miles from the Town of New Plymouth on the one side, or Wanganui on the other, The Tataraii inaka block, purchased from the Natives, and which has been parcelled oqt info thriving farms, for the most pa.it mujer cultivatiqii, may now be said, to he practically in the possesion qf the, insur-, gents. The homesteads of the settlers, their fences and cultivations, have been destroyed : and no settler will incur the risk of going on his own land. In fact, the natives boast that they hold the land by right of conquest. This state of things cannot, in the opinion of Ministers, be suffered to continue. As regards the policy to be pursued in reference to the settlement of Taranaki, several courses; are open. 1. Matters may be left as they are; in which case the settlement will by degrees dwindle away. Settlers will ahmdon it, particularly with the temptation of neighbouring gold-fields pre? seuted to them. It will become practically a military post, but to be maintained at heavy cost, with no definite object; for the restoration of the settlement under such circumstances would be hopeless. 2. It may be abandoned altogether : —a suggestion which would not, it is imagined, be for a moment entertained. In fact to abandon it, would involve a loss of prestige dangerous to the colony generally. 3. Vigorous measures may be taken to reestablish our position. And this appears to Ministers. the true policy. If there must be a war, it is better far that it should be at Taranaki than elsewhere. For whatever mischief could be inflicted on British settlements by a state of war, has been, done there. The penalties of war have been already paid. Besides this, the case of the Ngatiruanui and Taranaki Natives is the one which presents the fewest grounds of sympathy with other Natives. They engaged in the quarrel without provocation, and were guilty of gross outrages. Their present attitude is one of such open hostility, as in the eyes of well affected Natives themselves would not merely justify, but demand on our part active measures against them, and retribution for the wrongs done. Added to this, if operations were carried on with a view to open up and establish military communication by roads between Taranaki and Wanganui, such operations would be attended with some facilities, and in the end with great patent advantages. Ministers are of opinion (so far as they can presume to offer an opinion involving military considerations) that firm and decisive action should be taken in this direction. They believe the effect would be in no long space of time to bring the Ngatiruanuis and Taranakis into submission. The settlement of Taranaki might then, in the end, be re-established on a safer basis, and enabled to recover and extend itself. It is not improbable that hostile operations in the Taranaki country would draw towards it some portion of the Natives of other districts. Such a possible result would not, in the opinion of Ministers, be a sufficient reason against the course of action which they recommend. The time and manner of commencing such operations would require distinct consideration, The first object appears to be, as far as possible, to win back the allegiance of the bulk of the Native people, and to place the settlements in an effective position of defence. Ministers do not apprehend any aggressive movements on the part of the Natives as likely to result from the course which they recommend, except against the settlements of New Plymouth and Wanganui. There appears to Ministers no inconsistency in dealing with the main body of the Natives, the, Waikatos in particular, with a gentle and even friendly hand, and endeavouring by all legitimate means to recall and attach them to us ; and at the same time assuming a stern and decisive attitude towards the Ngatiruanuis and Taranakis, with a view to compel from them material guarantees for their future good behaviour. One other topic requires to be brought under Sir George Grey's consideration: namely, the recent gold discoveries as affecting Native policy. The fact of paying gold-fields existing inNNc r Zealand is now placed beyond a doubt. The auriferous district extends through the Northern and Middle Island from Cape Colville downwards, Already there are signs of a large influx of population, directed at present to the Otago gold-fields, but which will in all probability spread to the Northern Island, particularly in the direction of Goromandel. What may be apprehended is, lest gold-seekers should force themselves into native aaatricts against the will of the native owners, the result of which would probably be a collision wsitveen the races, leading to fresh political complications. It will, in the opinion of Ministers, be the duty of Government to guard against the risk by ttii means in their power. If the Natives could be prevailed upon to open their country to gold mining enterprise, the political difficulty would be solved, whilst at the same time the material interest of the colony, and of the European and Native races, would be advanced. This subject, Aowever, will scarcely demand much attention at present, unless richer gold-fields shall be discovered j» tne Northern Island than have hitherto been found. William Fox. i n ■■

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