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Vaka replied that Aitutaki was a small land, and New Zealand a large one. If foreigners wished to trade, let them come, but not stay. They must use the Market-house only. Mr. Broiun considered it hard to be placed in such a position. On his own account, and on behalf of other Europeans present, he said it would be doing them and the natives a great service if I could speak authoritatively on the question. I replied that I could not do so now. The position taken up by the natives was, I believed, quite new, and their power to take up that position would be settled, alter due consideration, by competent authority. On my return from New Zealand they should hear definitely on this point. But on another point I must warn the natives strongly. They had so far behaved well to Mr. Mason personally, but I heard that they had lately threatened to deport him, as Mr. Pearse had been deported from Mangaia. They must on no account use force towards any foreign resident. If they had complaints there was the Consul till the Eesident was living among them. Their complaints would go from the Consul to the Governor of New Zealand, who was deputed by Her Majesty the Queen to see that no wrong was done to them. Nor would the Governor suffer the natives to do wrong to foreigners. Mr. Exham here called my attention to an agreement which he stated the chiefs had made with Donald and Edenborough, allowing them to open a store in the island. It was on the strength of this that Mr. Mason had been sent. On inquiry I found that this agreement was entered in a recordbook kept by the Aitutaki authorities. After some delay the book was produced. The agreement proved to be properly signed by the leading chiefs, and witnessed by the Eev. W. Lawrence, the resident missionary and agent of the London Missionary Society. The date was the 19th July, 1890. The chiefs endeavoured to explain it away, and made excuses of various kinds, but were sharply reprimanded by Mr. Lawrence, who had not hitherto taken any part in the proceedings. Mr. Lawrence reminded them that his name had been somewhat reluctantly attached to the agreement, and that he had only done so after convincing himself that it was deliberately made and fully understood. Many of their opinions and wishes had his strong sympathy, but above all things they must be honest and true, and faithfully observe any agreements that they made. He sympathized with them in their fear of the evils that might follow uncontrolled trading, and hoped that in the settlement of the question their views w T ould receive the consideration they deserved. But meanwhile they must not break their word, and the agreement should be observed. After further discussion it was arranged that Mr. Mason should be allowed to open the store, he undertaking not to give credit to any native, and to obey the laws of Aitutaki. This was to last till the power of the natives to make laws restricting trade to the Market-house should have been authoritatively settled. The meeting thereupon broke up in excellent temper. Fbedeeick J. Moss.

No. 12. Mr. P. J. Moss to His Excellency the Goveenoe. My Loed, — Auckland, 17th January, 1891. In accordance with your Excellency's instructions of the 27th October, 1890, to inquire into the liquor-traffic in the Protectorate of the Cook Islands, I have the honour to make the following report:— I arrived at Earotonga on the 18th November, and found that the condition of affairs had not been exaggerated, and required immediate attention. The laws vary in different islands. Those of Earotonga (appended to my general report) enacted the most stringent prohibition. The earliest of these laws was passed more than twenty years ago. The exact date is unknown, as it is not the native custom to keep records of such matters, or of the meetings of chiefs at which public business is transacted. The first prohibitory law was included in the compilation made in 1879 by the resident missionary, printed at the mission press in Earotonga. The second law was given to me by the Eev. J. Hutchin, being one of several copies printed for circulation, and still in his possession. It is also strictly prohibitory, but bears no signature nor date. As far as I could learn, it was passed about the year 1888. As to the other islands, the laws of Aitutaki and Mangaia were equally stringent with those of Earotonga, and have been rigidly enforced, thanks to the absence of harbours, and the oceanbeaten reef by which they are fringed. In Atiu, Mitiaro, and Mauke the laws are similar, and have been fairly maintained. These islands also are reef-surrounded and harbourless, and have comparatively little intercourse with other places. In Earotonga, a central position and the possession of harbours have brought the natives into a more extended intercourse with the outer world. As trade increased, smuggling and bribery, with their attendant corruption, increased also. The laws were continually evaded, and at last fell into contempt, and became a dead-letter. This had been the case for several years. No attempt even was made to bring the law of 1888 into operation after it had been passed. It fell still-born from the press in which it was printed. I ascertained, on my arrival, that nineteen houses of different kinds and in different parts of the island were engaged in the sale of liquors drunk upon the premises. The keepers of these houses were generally Chinamen or Natives, and they were open at all hours, and to all people, whether natives or foreigners. Very much drunkenness was the result. The worst of these drunkards and the largest consumers of the liquor are, by universal agreement, declared to be the men from Mangaia, who come in considerable numbers to seek employment at Earotonga, and who are subject to the most stringent prohibition in their own island. The people of Aitutaki bear a similar reputation when away from their home. This is indisputable, and must cause grave doubt as to the efficacy of forced abstention in creating a soundly sober population,