A.—No. 2.

the confiscated land, under the " New Zealand Settlements Act." The amount which -will be required under tide head is very difficult to estimate. Amongst the papers transmitted herewith, is a list of the claims in Waikato which have been forwarded by the Colonial Secretary to the Judges of the Compensation Court for hearing. The number of claimants amounts to about 1,800, but there is no doubt that many of these claims are groundless, many more involve but very small amounts, and some have already been settled by agreement. There is, however, a sufficient number left to- lender the list a very formidable one to deal with, both as regards the expense and trouble of investigation, and the amount of money involved in the issue. The claims in respect of lands at Tauranga and Opotiki have yet to be added. The claims for compensation to settlers for losses sustained by the war also amount to a very large sum. The awards already made in the cases heard by the Commissioner for investigating these claims amount to £71,002 lCs. Id., and there are others yet to be heard. Many of the claims made were no doubt reasonable and fair, but, on inquiry, the Superintendent is led to believe that many were most unreasonable and exaggerated, and lie has little doubt that even the awards made in many of the cases will be found, on a more searching investigation, conducted on proper principals, to exceed what the parties are fairly entitled to receive; for it must be borne in mind that the hearings that have already taken place were ex parte only, the claimants, too, for the most part, appearing by a paid advocate, who carefully got up their eases ; and the General Government, that instituted the inquiry, not being represented at all. ' The acceptance of the proposed transfer of the confiscated lands will also involve a large outlay on various objects which will require to be carried out, in order to render colonization successful. Surveys, on a large scale, must be made. Immigrants must be employed and maintained, public works of considerable magnitude undertaken, and other expenses of a miscellaneous character incurred. After giving due weight to all the foregoing subjects for serious consideration, the consideration for the Provincial Council will be this—whether it will be advantageous to the Province of Auckland to accept the transfer on the terms proposed by the Eesolutions, with the pecuniary assistance which the General Government is willing to afford, in order to render the administration of the lands by the Provincial Government a successful undertaking ? To this question the Superintendent has devoted much carefu consideration, and he feels satisfied that the right course is for the Provincial authorities to accept the proposal made to them; and for the information and assistance of the Council the Superintendent will briefly state the grounds upon which he has arrived at that conclusion. It is not open to question that the Colony at large is much interested in the success of the settlements placed upon the confiscated land, and that they should be increased and strengthened, as affording the best security against another native war; and to the Province of Auckland it is beyond doubt that success is of vital importance—indeed, having regard to the enormous liability to which the Province is now subject, as a consequence of the native war within its territories, failure would involve ruin. No direct pecuniary gain to the Province can, of course, be obtained under the conditions pro • posed from the sale of the surplus lan Is, after satisfaction of the engagements imposed, as the Provincial Government is required to pledge itself, after recouping actual cash payments, to expend the whole proceeds derived from the confiscated lands in colonizing, and otherwise for the general advantage of the confiscated districts. The transfer will, however, be sufficiently advantageous to induce its acceptance, if the proceeds of the sales of the laud to be disposed of can be made to cover the sums to be charged against them, for indirect gain will necessarily follow successful colonization, and the amount of this gain will be measured by the extent and prosperity of the settlements to be maintained and planted ; and having regard, indeed, to the large annual sum which has now to be paid, partly in common with the other Provinces, and partly specially fixed on this Province by the Loan Allocation Act, 18G5, it is essential that the contributors to the revenue should be numerous and prosperous in order that a sufficient revenue may be raised to meet the necessary demands on it. By what means, then, can success be best obtained ? Through the administration of the Colonial Government, or of the Provincial Government ? To the Superintendent it is quite clear that the distance at which the former Government is now placed renders administration at all by them difficult, Mid successful administration almost impossible ; and that the work to be done can be more inexpensively and efficiently performed by the lr.ttev Government. Moreover, this Province has had the experience of the management by one Colonial Ministry to guide to a decision ; and their successors, the present Ministry, say plainly that "the neglect which would almost be forced on them of prosecuting the colonization of the land in question would render futile most of the past expenditure, and entail in the future a very large expenditure in re-occupying and settling these lands." Much of this past expenditure has already been charged against this Province, and the principle established will apply to a large portion of that which the General Government will be compelled to incur if the transfer of administration now proposed be not accepted. This Province, then, is specially interested in taking care that the future expenditure be economically conducted, and made productive of profitable results. It will have to pay whatever the event; and it is, therefore, of the first importance that it should possess the power of supervision and control. Care must also be exercised that too contracted a view of the relative positions of the Colony and the Province be not taken. A lavish or unproductive expenditure of colonial money most seriously affects the interests of all the Provinces; is, indeed to each Province second only in importance to 'such an expenditure of its own separate funds; if, therefore, witli justice to ourselves, it is possible for us, by taking the management of local work, to economise or render profitable the expenditure of the General Government, it is clearly our interest, as well as our duty, to do so. Moreover, the position in which this Province especially stands in relation to the colony cannot with propriety be left out of consideration. We may fairly look upon ourselves and our interests to

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FGETHER PAPERS RELATIVE TO THE SETTLEMENT