G.—B

8

Cambridge, and it was the result of a conflict about Waiharakeke. This letter settled the Waiharakeke question, for it secured Waiharakeke West to Mr. Russell. This is what Mr. Eussell refers to in his letter of the 31st July, 1874 (Enclosure 6 in No. 5), when he says, in reference to Waiharakeke Block, " This is settled." By this, he means that, so far as his position is concerned, the matter is definitely set at rest, and he is to receive Waiharakeke West as soon as the Government have completed the purchase of the block. 11. It may be said, Yes ; but the Government have not sanctioned this act on the part of their agent, Mr. Mackay. I answer, they have done so over and over again. They have never disputed it. As authority for this statement I refer to Mr. Mackay's letter (No. 5), where he says, in relation to the arrangement he made with Mr. Eussell, as follows : "which action on my part was subsequently approved by the Government." 12. Then, in the Hon. Mr. Bowen's telegram to the Superintendent of Auckland (No. 2 of printed papers), he says as follows : "As Mr. Mackay considers it highly desirable that the Government should have the east side of the river south of the Aroha Block, Mr. Mackay proposed to Mr. Eussell that he should give up the land to the eastward of the river and retain that on the western bank. The Government afterwards sanctioned this arrangement." It will be noticed that Mr. Bowen there refers to the whole western bank, and not simply to Waiharakeke West, and the after portions of this letter show why this is so. 13. In support of my statement that Mr. Eussell was buying land on the Waihou and in the Thames District before the Government, I refer to No. 2 printed papers, where Mr. Bowen says, " Mr. Eussell was buying land at Waiharakeke and Hungahunga before the Government and previous to the Proclamation under the Immigation and Public Works Act." (See also Mr. Mackay's and Mr. Preece's letters.) 14. Then, again, Mr. Eussell was not bound to price, the Government were ; and, there not being any Proclamation issued, he was acting lawfully. Mr. Preece says in his letter, "That up to the time of his obtaining the agreement for sale (31st March 1873) the Government were not in negotiation for any land in the neighbourhood or within very many miles of it." Here, then, was a good and valid agreement, which, according to (No. 2) Mr. Bowen, Mr. Mackay was instructed to respect, and Mr. Mackay did respect it; and it is clear, and as important as it is clear, that the rights which Mr. Eussell then had, and which were to be respected, included the whole western bank and very many thousands of acres more than he has ever claimed. 15. It is also clear that Waiharakeke West was not all that Mr. Eussell was seeking for. Mr. Mackay says, in his letter, that he was asked by Mr. Eussell if he would act for him in purchasing Waiharakeke and Hungahunga, and, on his declining, Mr. Eussell employed Preece and Graham, who entered into the agreements. The intention,, and object of Mr. Eussell is thus made plain. He desired the whole western bank, and agreed and paid moneys for it. 16. Waiharakeke West, containing about 1,487 acres, is one distinct claim, and is to be given to Mr. Eussell on his paying therefor the amount which it cost the Government, and the right of the piece of land, I cannot forego on any terms. It was wanted for drainage purposes ; and, as it lies between Hungahunga and the river, it is the only outlet for drainage. The acquisition, therefore, is indispensable ; and, as to this, I do not foresee any difficulty, as Grant and Foster's intended purchases do not affect it. 17. I shall now leave Waiharakeke West, which I also look upon as settled: it only being a question of time when the Government complete the purchase of the whole Waiharakeke Block, when the account of the cost to the Government (which account the Hon. Mr. Ormond, in his letter of the 25th May, 1877, says could not be furnished as the purchase had not been completed) will be presented to Mr. Eussell. 18. Now, as to Mr. Eussell's claim to a portion of the Mangapouri Swamp, estimated to contain about 8,000 acres, which is a portion of the land required by Grant and Foster. The facts formerly stated as to Mr. Eussell's intentions, and his negotiations, and the extent of his purchases, and the arrangement with Mr. Mackay as to the eastern and western banks, all apply to this claim; "for the arrangements then made with Mr. Mackay are the foundation on which the claim is built. The principle of the arrangement then made is clearly stated in Mr. Mackay's letter of the 2nd January, 1874, relative to giving Waiharakeke West —namely, that the Government were to buy, and Mr. Eussell retire, and then give the required land to Mr. Eussell at cost price. 19. It was also quite clear (see Mr. Mackay's letter of the 18th July, 1874, Enclosure 5 in No. 5) that Mr. Mackay was not to buy for the Government on the western bank, but confine his purchases to the eastern bank; so that under this arrangement Mr. Eussell could, strictly speaking, claim all land acquired by the Government on the western bank at cost price. This, however, Mr. Eussell has not asked for, and on his return to the colony in April, 1874, he urged on his purchases ; but it was again found that similar conflicts were arising almost every day, the purchasers' payments enuring for land on both sides of the river. In these circumstances Mr. Eussell, at Mr. Mackay's instance, applied to the Government to have the principle of the arrangement contained in Mr. Mackay's letter of the 2nd January, 1874, relative to Waiharakeke West, extended to the lands further down the river. Accordingly, Mr. Eussell wrote his letter of the 18th July, 1874. (Enclosure 4in No. 5.) This, with Mr. Mackay's reply, is set out at pages 4, 5, and 6. 20. Now, the claims of Mr. Eussell on the western bank were very extensive; but, in order to have all obstacles removed, and leave Mr. Mackay alone in the field, Mr. Eussell wrote the letter to Dr. Pollen, set out at pages 6 and 7, limiting his claim to a small portion of the land, sufficient to square his boundary and give.Jaim some frontage to the river. Now, this letter expressly and definitely set out the arrangement and position of affairs, and the modification and limitation which Mr. Eussell proposes' to accept, and his reasons therefor; and, above all, it sets out with reasonable clearness the boundaries which Mr. Eussell is willing to accept. 21. It will be noted that, in Mr. Mackay's reply to Mr. Eussell, he says he is prepared to recommend the boundary proposed by Mr. Eussell; and this reply of Mr. Mackay's is annexed to