G.—4

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money Every one foresaw that this unwholesome system of credit must ultimately have worked its end. It might have been pulled up by degrees without occasioning any great pressure, but the opposite happened. The banks suddenly determined to change the system, and the result was the severe financial depression that ensued, which was further increased by the gradual cessation of the public works expenditure. My memorandum of February last on the Native Reserves Bill of last session, referred to me for remark, will have apprised you of the necessity that several material alterations and additions should be made in it before it is allowed to become law The present agitation in Ireland having been the means of bringing the condition of the land question there, with all its attendant evils, prominently before the public, it behoves us to avoid adopting any of the principles that tend to place the tenant in such an unsatisfactory position as now obtains in that country I allude to the insecure nature of the tenure, and the unsatisfactory mode of procedure the Act provides for the administration of the property. Under clause 13 the Native Reserves Trustee is barred by the provisions of " The Maori Real Estate Management Act, 1867 " (to which his powers are made subject) from issuing a lease for a longer period than one year without the consent of a Judge of the Supreme Court or the Native Land Court; and, to make matters more complex, it is further provided that all leases shall be submitted to public auction. Fixity of tenure and fair rents, with a recognition of tenants' improvements, are the measures now proposed in England by liberal-minded statesmen as a remedy for the present unsatisfactory condition of the land tenure in Ireland. The advocacy of these principles in a country where a strong bias exists in favour of landed proprietors and the rights of property goes far towards the possibility of achieving a reformation in the present relation between landlord and tenant, as it embodies a principle which, before it expends itself, will probably revolutionize the land tenure of Great Britain, and finally dispel that old feudal feeling which disposes landowners to look upon tenants as mere retainers or dependents. The principle of rack-renting, or fixing rents by public competition, proposed by the Act, is a very objectionable procedure, and one that will tend to discourage the occupation and improvement of the property, as it embodies all the rules of extravagant rents, insecurity of tenure, and ruthless appropriation of tenants' improvements. Leases should be granted as far as possible to encourage the full application of capital, and at the same time to avoid the deterioration of the property at the expiration of the term. There can be no question that security of possession to the tenant is indispensable to the improvement of the property, as it is clear that no person in his senses would enter upon an extensive system of improvements unless he held a certain permenancy of tenure for a sufficiently continued length of occupation to enable him to repay himself for his outlay, otherwise he would be ruined if he had no claim for compensation at the end of his lease. 1 have pointed out on several occasions that the general principles upon which the Native reserve property should be administered are that the lands should be let with a view to secure an immediate return at the best improved rent which can reasonably be obtained at the time; the sufficiency of rent to be governed by the consideration on whom the onus of repairs or the cost of improvements is thrown. The length of lease ought to vary with the description of property proposed to be placed on the ground, or the uses to which it is to be devoted. For instance, a twenty-one years' lease should be granted for arable or pastoral purposes, and for building purposes a lease for twenty years, renewable for two further periods of twenty years, a reassessment of the rent to be made at each renewal; the tenant to have the right to call in the aid of a neutral authority to arbitrate in cases where a difference of opinion existed as to the fairness of the rent imposed. Some such terms might serve as a general guide, subject to such variations as local circumstances might require, but many cases will have to be dealt with separately ; and it will be especially necessary in dealing with all existing arrangements to take each case on its merits, and treat it as fairness and equity may require. Having already drawn attention in my memorandum to the many other points that require amendment in the aforesaid Bill, there is no necessity for my dealing further with the question, than to remark that it would be more preferable to leave matters alone under the existing Acts, although imperfections may exist, than to pass an unsuitable measure, after the many attempts that have been made during the last ten years to legislate on the subject. I have, &c, The Under-Secretary, Native Department, Alexander Mackay, Wellington. Native Commissioner.

Enclosure No. 1. Statement of the Receipts and Expenditure of the Nelson Native Reserve Fund, from the Ist April, 1880, to the 31st March, 1881. Meceipts. £ s. d. £ s. d. To Balance to credit, Ist April, 1880 11 19 7 Rents collected at — Nelson ... .. .. 583 0 0 Motueka . .. 751 13 9 Westport .. . 81 2 6 _ . i ; 4is 16 9 £1,427 16 4