A.—No. 1.

No. 42. Copy of a DESPATCH from Governor Sir George Grey, X.C.8., to the Eight Hon. Edavard Cardwell, M.P. (No. 42.) Government House, Wellington, Sm,— 12th May, 1866. At the request of my Eesponsible Advisers, I have the honor to transmit for your information the enclosed Memorandum, and a Statement which accompanies it, showing that the sum of four hundred and five thousand one hundred and forty-six pounds and eleven shillings (£405,146 lis.) has been paid from the Colonial Treasury on account of Imperial Troops and services. I have, &c, The Eight Hon. Edward Cardwell, M.P. G. GEEY.

Mr. Stafford, April 10,1866.

Enclosure in No. 42. Copy of a Memorandum by Mr. Stafford. AVellington, 10th April, 1866. His Excellency's Ministers have given much attention to the question of the claims which have for some time been preferred by the Imperial Government against New Zealand. They believe it to be most desirable that these claims should be settled as soon as possible, and that no misconception with respect to them should continue to exist; and with that object they have endeavoured to ascertain the exact sum for which the Colony was fairly liable. They have however found it impossible to arrive at any definite conclusion on the subject. The claims have been stated in many different ways —sometimes classed under one head, sometimes under another, neither the classification nor the totals agreeing in the different statements; and in the absence of sufficient vouchers, or references not hitherto supplied, the Colonial Government has been in a great measure left to conjecture what the particular services might be in respect of which payment has been asked from the Colony. Ministers are aware that considerable sums have been issued from the Imperial chest, and rations and stores supplied by the Commissariat to the Colonial Forces. The Colonial Government has always desired to repay these advances, and with that object, notwithstanding the severe pressure on its finances, remitted some time since half a million of Debentures to the Imperial Government. But the advances which the Colonial Government has a knowledge of fall far short of the total claims now made by the Imperial Government; and Ministers respectfully submit, that without further information these claims (except such as comprise the advances made at the request of the Colonial Government), are either unintelligible, or, so far as they can be understood, appear to include charges for which the Colony has never rendered itself liable. The Colonial Government has always admitted and taken steps to discharge the liabilities incurred by it, and is now desirous that means may be afforded to it of determining the amount of its liabilities. In connection with this subject, Ministers have to submit that the Colony has a large claim against the Imperial Government for advances made from tho Colonial Treasury to defray the cost of charges incurred on account of Her Majesty's Eegular Forces. A statement is enclosed, showing approximately the amount of these advances, which, with a few exceptions, were made on the express requisitions of the Officers commanding the regular troops. The Colonial Government was induced to make these advances from an earnest desire to meet the wishes of the Imperial authorities to the fullest extent; and when it is considered that at the same time the Colony was also raising and maintaining large numbers of men at its sole cost to co-operate with the regular troops, and latterly to enable the troops to be withdrawn, it is submitted that the acts of the Colonists in the past, and the engagements they have entered into for the future, are without parallel for so small a community, and may fairly entitle it to the utmost consideration. It is probable that the statement now furnished may, in like manner as the claims made by the Imperial Government, require detailed explanation. Ministers believe that it would be difficult and cause much delay to attempt to supply by correspondence such explanations as would finally settle the questions at issue, and would therefore submit that, with a view to full explanations being given, the claims of the Imperial Government on the Colony, and those of the Colony on the Mother Country, should be subjected to a thorough examination, which it is believed could best take place in New Zealand, where the evidence in connection with them can be supplied. Such an examination would enable the respective claims to be settled without that delay and dissatisfaction which must otherwise en&ue. In the meantime it may be observed that the amount of the claim of the Colony, four hundred and five thousand one hundred and forty-six pounds eleven shillings (£405,146 lis.), when deducted from the claim of the Imperial Government—even assuming the total amount claimed by the latter to be admitted—reduces the sum due to the Imperial Treasury considerably below the value of the halfmillion Debentures already remitted, even if the latter were sold without the Imperial guarantee which was offered to be given to them by the Duke of Newcastle and Mr. Cardwell. It is requested that this Memorandum and the accompanying Statement may be transmitted to the Secretary of State for the Colonies. E. W. Stafford.

101

ZEALAND TO THE SECRETARY OP STATE.