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5. Erom Cambridge I travelled across the country to Rotorua, not only to show the Hot Lake district to Mr. Dv Cane, but because the ability of the Governor to pass through the Native districts without any unusual escort is calculated to produce good results, giving confidence both to the European and to the loyal Native population. It is not long since a horse-track has been cleared on this route, and I believe it has not been traversed by any former Governor. 6. Upon this occasion I was a spectator of a large gathering of Natives near Rotorua, for the settlement of a dispute of long standing, about the ownership of a large tract of land known as the Te Ilorohoro Block. This dispute had lately come to a head, and in former times would certainly have led to a war ; but, by common consent, the contending parties agreed to abide by the arbitration of the Government, and certain officers conversant with Native customs, being appointed to act, were able to conduct the inquiry with the utmost regularity in the presence of all interested, and to come to a conclusion in favour of one party without any doubt of the acquiescence of the other. 7. Again on the 13th May I left Auckland on a visit to the district north of that place, inhabited chiefly by the powerful Ngapuhi tribe, who have always been very friendly since the conflict of 1845, but among whom there have been a good many acts of violence from time to time. I visited the Bay of Islands, passed overland to Hokianga, and upon my return went on by sea to Whangaroa and Mongonui. It is gratifying to see the cordial relations existing between the Europeans aiid Natives throughout the northern district. Large numbers of the latter are employed by farmers, timber merchants, and others at the current wages of the colony, with mutual satisfaction. 8. It is proper that I should inform your Lordship that during the last two months there have been decided indications of a desire, on the part of the " Hauhau" party among the Maoris, to put an end to their estrangement from the Government. Their chiefs appear to be divided among themselves, and both they and their people desire to share in the advantages which the loyal tribes enjoy. A meeting lately held by Tawhiao, the Maori " King," for which preparations had been made during many months, and which had probably been intended to unite his party, proved a failure, and upon its separation the principal chiefs came to the neighbourhood of the frontier, where they have stated that they remain in hopes of receiving terms from the Government. A loyal chief of the Waikato, who has for many years been active in support of the Government, has twice waited upon me, and assured me of his belief in the willingness of the separated tribes to come under subjection, provided that they be permitted to manage their own affairs under their own chiefs, upon which basis they would be ready to admit communication through the district, and provide for the surrender of criminals. I trust that the Government will not lose an opportunity of so desirable a consummation, but in the meantime nothing is being done, on account of the absence of Mr. McLean, the Native Minister, upon public business in Australia. It remains to be seen, indeed, whether the "Hauhau" chiefs are really disposed to surrender their independence, a step which would be distasteful to many of their followers. 9. With the exception of the danger of incursions of some turbulent members across the boundary, against which due precautions are taken, there is no disturbing element in connection with the Native population. Europeans are constantly becoming more intermixed with them, and they more habituated to, and dependent upon, the comforts of European products, and the money derived by the sale or lease of their lands. There is, however, much cause for regret in the demoralising influences which invariably accompany the influx of Europeans. Eew Natives of any class can resist the temptation to drink, habitually and to excess, while they have the means of indulging in it. There are chiefs who set an example of sobriety or total abstinence, but it cannot be doubted that the frequent excess in ardent and often bad spirits by both sexes, and their inordinate use of tobacco from a very early age, are permanent causes of the rapid and almost general diminution of the. numbers of this fine and capable race, which is presented alike by the paucity of birtbs, and the mortality among the children (rather tban among the infants). At the same time there is reason to hope that a remnant will be saved, and that the