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A.— s

APPENDIX IV. Sm, — Samarai (Dinner) Island, S.E., New Guinea, 10th September, 1886. I have the honour to report to your Excellency the progress of events in the district under my jurisdiction. Following my intention indicated in my letter of the 6th August last, I proceeded next day on board the s.s. "Victory" to Giligili, Milne Gulf, where I inspected Messrs. Kissack and Co.'s thriving copra-station. I then investigated the question of threatened hostilities on the part of the natives referred to in my last letter. I found that Messrs. Kissack and Co.'s Maltese in charge had been guilty of acts offensive to the natives. After some discussion the matter was arranged between all parties in an amicable manner. I could not help, however, observing that the natives from the surrounding districts, who had come in as spectators of what was going on, exhibited only a very latent friendliness. On my return from this malarious district I was laid up for several days by a severe attack of fever. I have to report to your Excellency a breach of the regulations in force regarding the importation of spirituous liquors. Eurey Augustin, a Mauritius half-caste (at one time my servant, but dismissed for bad conduct), imported from the " Victory" spirituous liquors on her arrival. I warned him that it was illegal so to do without a permit, but he repeated the act on the return of the vessel here both from Teste Island and from Milne Gulf. During my absence in Milne Gulf he appears to have had an attack of delirium tremens, in which his conduct was so violent that the teacher's family, in whose house he was living, were compelled to take refuge in the bush. Owing to my own illness it was some days before I could investigate the matter. He fully admitted his offence, but, as it is difficult to enforce here any punishment I may desire or find necessary to inflict, I considered it best to take his retribution ad avizandum ! Meanwhile I offered him a chance of retrieving his character by good conduct in employment about my house, promising him a fair wage. Only a few days did he conduct himself creditably. He not only refused to recognise, but even tried to resist, before the natives, my authority. lat once held an inquiry on his previous conduct, and took down in his presence the evidence of those who actually saw him with spirituous liquors ashore, drunk, or misconducting himself, and placed him in arrest on board the " Coral Sea," away from intercourse with the natives, till further orders. At the moment of writing it is my intention to send him to Cooktown by H.M.S. " Harrier " about the 15th instant, if this can be done. This will get rid of an objectionable character out of the Protectorate. On the 16th August last the " Coral Sea " arrived after a rough passage from Port Moresby. On the 18th I considered it my duty to despatch her to examine {via Teste Island owing to the wind) the islands to leeward of the probable route taken by Dick's missing boat. On her arrival at Teste Island, however (where she landed a Earotongan missionary of the London Missionary Society, who is to labour there), she found that canoes from the islands intended to be visited had recently arrived at Teste Island, and reported that none of the missing men had reached their islands. It is now beyond doubt, I fear, that all have perished. ' Until the 24th August the " Coral Sea " was occupied in transferring surplus stores on shore, fixing new sails, and getting thoroughly cleaned out (of which she was very much in need). I employed, meanwhile, a couple of the men for two or three days in sinking shafts in search of fresh water. The flat-land bore has produced only brackish water; the higher one will, I hope, yet afford us a better supply, but from a depth of lift. Meantime rain-water is more abundant than desired. On the 20th August a large canoe-load of Milne Gulf natives—relatives of one of the lads drowned in Dick's boat—arrived in Dinner Island (the place of the boat's starting) to wail. They were mostly armed, and their movements about the island were so suspicious that it was considered advisable to keep a very sharp night-watch on them, lest they should secure some one's head in payment, according to their custom, for the death of their relative. On Sunday, the 22nd, they intimated that they would be satisfied with an exchange of gifts in token of friendship. This was arranged at my request by Dick and other residents on the island, when they quietly took their departure. On the 21st August Mr. Kissack arrived from Teste Island to select, on behalf of his firm, a site for his house and store, agreeably to your Excellency's permission and terms. Enclosed are copies of the documents relating to this transaction, which I trust may meet with your Excellency's approval. Enclosed also is my own bank draft for £5, the annual license-fee paid me by Mr. Kissack in notes. As the firm is anxious for the completion of the buildings before the arrival of the s.s. "Victory" in October next, operations were begun at once, and are progressing rapidly. On the 25th August H.M.S. " Dart " arrived from Townsville after a stormy passage, bringing the mail. The weather experienced by her and the " Coral Sea" supervened here, and continued, accompanied by heavy squalls of wind and rain (detaining the " Dart " at the anchorage here), till the 30th, since when calms and uncertain winds have prevailed. On the 30th I proceeded to Heath Island to examine it, in accordance with your Excellency's instructions, for a site for a Government residence (which will be absolutely necessary for your Excellency's representative during the heavy winds and rains of next monsoon, as the edifice of the London Missionary Society is everywhere leaky, and in an insecure condition). I shall make a report on my visit on a future occasion when I have seen all the other likely localities. On the 2nd September I proceeded to Killerton Islands in consequence of the unfriendly relations between the people of Milne Gulf and Dien, the London Missionary Society's teacher there, and their threats and attack on him. After a long conversation with Dien—whose statements at different times were much at variance and unconfirmable, owing to my having no interpreter through whom to examine the natives—l found it very difficult to discover where the blame lay. I imagine both sides are at fault. I have warned Dien to keep strictly to his missionary duties (he admits he has been hunting " by his boys " for paradise-birds in the lands of the tribes of the Gulf, and that he has been making gardens—very probably not illegally—there also), and that if, on further