E.—No. 3. SECTION I.

I at once prepared a digest of the news for translation, and with the kind co-operation of Mr. Fox, had it quickly circulated through the District. I regret to say that it has produced no salutary effect, as the native account which gives a very different result, is generally accepted as the true one by both Kingites and friendly natives. I append (Enclosures 4 and 5,) copy and translation of a letter from Pehi Turoa to the chiefs on this river, professing to give a full and circumstantial account of the battle, and reporting 140 soldiers killed and only 24 Maoris ! Other letters state that the pa was stormed and carried by the Troops, but retaken by the Natives on the evening of the same day. The Otaki King meeting for the discussion of the Tataraimaka question, was held on Friday last, the day after the receipt there of the Taranaki intelligence, I append my assessor Ihakara's report of the proceedings and issue—(Enclosure 6) which will be read with interest. I regret that I cannot report so favorably of my District as heretofore. Recent disclosures have very much shaken my confidence in the sincerity of some of our leading " loyal" chiefs ; and I confess to serious misgivings about the future. I have no desire to be counted an alarmist or panic-monger, but, sensible of the responsibility that attaches to the other extreme, and after full consultation with Mr. Fox I deem it my duty to state that the position of our out-settlers in this district, is fast becoming insecure, and calls for some protective action on the part of the Government. Mr. Fox has embodied his views in a letter, a copy of which, by his permission, I forward herewith. (Enclosure 1.) I shall proceed to state in some detail, the occurrences that, together, have led to this conclusion. 1. Towards the close of last month there was a large meeting of natives at Parewanui (Lower Rangitikei) for the professed object of discussing the "Ngatiapa land dispute." (See my ietter of 31st December.) It consisted chiefly of Ngatiraukawa and Ngatiapa, with representatives from the Whanganui, Rangitane, Ngatikahungunie and Muaupoko tribes. The meeting dispersed without any clear decision on the land question, while vague rumours were circulated of sinister motives, secret meetings, and plans of organization against the Pakeha. These I disregarded. 2. Soon after the meeting I received a letter from Ihakara Ngariri, Christian teacher at Turakina, intended as a warning to the settlers of an impending general " huake," or rising of the tribes. (Copy and translation attached—Enclosures 2 and 3.) Of this I took no immediate notice. 3. Wi Te Pukapuka, Noa Te Rauhihi, and Aperahama Te Huruhuru we have been accustomed of late to regard as the leading loyal chiefs at Rangitikei. On the occasion of the Resident Magistrate's Court sittings there on the 3rd instant, when a number of Natives had congregated, these chiefs desired a public audience of Mr. Fox and myself. We adjourned the Court for this purpose. Individually and in the most unequivocal terms, they then declared their loyalty to the Queen, their abhorrence of the Taranaki murders, and their determination to remain faithful to the Government, and concluded by promising to report fully to us all that transpired among the Natives, on our consenting to keep them informed of our movements at Taranaki. 4. I now have positive information that one of these assessors (Aperahama) during the Parewanui meeting, packed with his own hands, and sent by Epiha as a present to the Ngatiruamii, a supply of leaden bullets ; and that one of the others (if not both) was cognizant of the transaction. The disclosure was accidental. Nepia Taratoa (son of the late chief) had collected subscriptions for his father's tombstone. Aperahama and Pukapuka reported that the donations (amounting to £5,) had been spent by young Nepia in drink. The latter called at my house on Wednesday last. I refused to see a "man who could drink his father's tomb." He denied the fact, and I gave names. In his shame and anger he exclaimed " Now I shall tell of them," and he proceeded to give a circumstantial account of what had taken place. In the midst of it, most opportunely the three chiefs in question arrived. Nepia boldly confronted them and reiterated the charge. Aperahama flew into a passion, attempted to frown his nephew down, and went away in dudgeon. Te Pukapuka first denied the charge, but on being pressed, endeavoured to exculpate himself at Aperahama's expense. Te Rauhihi stood silently by, manifesting no surprise, and offering no excuse. Nepia added, " These men are fooling you ! They made speeches to you and Mr. Fox to keep you in the dark, but soon you will find them out." 5. This circumstance manifesting gross duplicity on the part of two principal assessors, directed my attention afresh to Ihakara's letter, and I started for Turakina, with the view of sifting it thoroughly before reporting. I found Ihakara an intelligent and straightforward Native. He urged in strong terms his belief that, while no designs had been matured, the desire to attack the Pakehas was fast gaining ground among the disaffected, and he broadly accused our Rangitikei assessors of deceit and falsehood. 6. Still reluctant to awaken the fears of the Government, I met Mr. Fox on my return, and discussed fully the whole subject with him. I found that his suspicions had already been aroused. A party of Natives (Kingites) in his employ had simultaneously left, immediately after the king meeting; the Ngatipikiahu had suddenly decamped to the opposite side of the river; a large party of Taupo Natives were shortly expected to arrive " in search of employment," an unusual movement in the depth of winter. These, and minor circumstances which gather significance from their connection, had excited his attention ; and he now agreed in opinion with me that it was important that the Government should be at once put in possession of these facts. At the risk of being tedious, I have endeavoured to do this, and it now only remains for me to express the hope, that the Government will take into serious consideration, the proposal made by Mr. Fox for a small steamer to be laid on between Taranaki and Whanganui. If this steamer could also at fixed intervals touch at the Manawatu and Rangitikei ports, it would give a strong sense of security to the coast. As the Government will observe, it is proposed to form at once a Volunteer corps at Rangitikei, and to arm the settlers. But whatever is done in that direction, should be done quietly and cautiously. I apprehend more real danger at present from a panic among the settlers, than from any hostile disposition of the natives, for the former would most assuredly precipitate the latter. At the same time

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TO THE SECRETARY OF STATE.