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Sir George Grey is quite correct in assuming that I was acting as a private land purchase agent at the time the Hon. Mr. Ormond requested me to undertake the acquisition of Native lands for the General Government. I had been acting in that capacity from the Ist August, 1869, and my professional earnings amounted to upwards of £1,500 per annum. I was, in January, 1872 engaged in business negotiations with private individuals and associations to undertake the purchase of the whole of the Coromandel Peninsula, subject to the right to mine acquired by the Crown, or the rights to timber of private persons or companies; and capital was at my disposal for the purchase of the whole at a maximum average rate not exceeding ss. per acre. I waived these arrangements at the urgent request of the Hon. Mr. Ormond, backed by the personal influence of Mr. Gillies, Superintendent of the Province, and that of Dr. Pollen, then Agent for the General Government. Messrs. Preece and Graham had been offered the business, but declined to do it for a less commission than 6d. per acre. I arranged to take a commission of 4d. per acre for all lands purchased by me. I however objected to acquiring any land unless the prior rights of Europeans to kauri timber were conserved. In considering the proposals made by Sir George Grey, it is necessary, in the first instance, to confine my remarks to the arrangement before mentioned, as set forth in my letter of the 24th January, 1872, and in Mr. Under Secretary Knowles' reply of the 4th March. In order to do this properly, Sir George Grey's quotation of a portion of my letter requires amendment, by striking out several words which are not to be found either in the original or the published copies of it. I wrote as follows, viz., — " With reference to the vested interests and claims of Europeans to kauri timber situated within the blocks of land proposed to be purchased, some of which are held under valid leases made subsequent to the issue of certificates of title by the Native Land Court, and others by agreements made previous to the issue of certificates of title for the lands comprised in such agreements, I would beg to recommend that in all cases where the parties are in actual possession of the timber, and do not obstruct the Government in negotiating for the purchase of the lands, that all such agreements, leases, and private inteiests shall be respected, and the conveyances by the Natives to the Crown shall take notice of and confirm all such reasonable and fair leases, agreements, and transactions. I would point out that the timber trade is of vital interest to the gold fields, and is one of great importance to the Province of Auckland, and very large capital is invested in it; and although the agreements for the acquisition of timber are not, in the majority of cases, strictly legal or valid, yet many of these so-called illegal agreements have been made by and with the assistance of the officers of the Native Department. If the Government acquired the kauri timber it would only be destroyed by miners and bush fires. At the present time where the kauri timber is not the property of millowners, it is a fruitful source of discontent between the Miners, Government officers, and the Native proprietors." Mr. Under Secretary Knowles replied thus— " Mr. Ormond is fully aware of the influence which the holders of timber rights and claims might exercise in opposition to the sale of the lands by the Natives, and the policy of respecting those claims, whether legal or equitable; but it must at the same time be borne in mind that many of the blocks on the Coromandel Peninsula have, apart from their mining value, no other value than that which their timber gives them, the right to which, you state, has in many cases been alienated, and required to be conserved. In estimating the purchase money of all such blocks as have not acquired a value for mining purposes, this should be taken into consideration, as the Government will have no option but to avoid interference with these old arrangements, wherever it is practicable to do so." Sir George Grey alludes thus to my letter: " He, in his letter to the Minister for Public Works of the 24th January, 1872, suggested, in reference to the large blocks of land which he was to purchase from the Natives, that in some cases Europeans had claims to the timber on such blocks, and in other cases had made agreements with Natives regarding lands contained in the blocks, some of which leases or agreements might be valid, having been made subsequent to the issue of certificates of title by the Native Land Court, whilst others were invalid and unlawful, the agreements regarding them having been made previous to the issue of certificates of title for the lands comprised in such agreements." The paragraph as written by me, and answered by Mr. Knowles, referred to kauri timber only, and to leases and agreements made between Natives and Europeans respecting it. Sir George Grey's interpolation makes it to apply "to cases in which agreements had been made regarding the lands contained in the blocks," a question which was nowhere raised by the Hon. Mr. Ormond or myself in the correspondence alluded to. I therefore propose to deal, firstly, with the kauri timber question; and secondly, to consider the points raised by Sir George Grey's manipulation of my report. In March, 1872, there were within the Hauraki District some fourteen saw-mills, either working or in course of construction. These found employment for about 600 men, irrespective of the persons manning the vessels engaged in the timber trade. The capital which had been expended, or was then in the course of expenditure in the erection of saw-mills, with the dwelling-houses and plant connected therewith, amounted to about £120,000 ; in addition to which the proprietors had paid about £30,000 to Natives for kauri timber within the twenty years preceding that date. Some of these purchases of kauri timber were held by legal instruments in the shape of deeds of grant, leases, or agreements, made subsequently to the issue of