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No. 89. Cook and other Islands Administration, Wellington, Sir,— 16th October, 1903. I have received your letter of the 22nd September stating that you had acquired No. 78. Sections I and 111, Arutanga, Aitutaki, the first as a site for wharf-sheds, and the second as the site on which the present Courthouse is erected. I think you have made vei , } , satisfactory purchases, and I quite approve of your proposal to lease the land not required at a rent of ,£1 10s. per lot per annum for fifty years. I have, &c, The Resident Commissioner, Rarotonga. C. H. Mills.

No. 90. Sir, - Rarotonga, Cook Islands, 19th October, 1903. I have the honour to acknowledge the receipt of your letter No. 101, of the 21st ultimo, No. 71. and in reply thereto it is necessary to advert to the position of these Islands when the cost of the schooner was guaranteed by the Government of New Zealand. At that period we had a Customs tariff suitable for revenue purposes, and the whole of the duties were collected within the Group; we were therefore in a position to pay off this liability at the rate of £1,000 per annum. When, however, these Islands were included within the boundaries of New Zealand, one-half of the Customs revenue was collected in that colony, and at the same time our expenses were increased by reason of other islands being included within this local Government. The result is that we are not now in a position to do anything towards paying off the cost of the schooner, nor can we afford to pay the insurance thereon, and I may say that I did not expect to be called upon to pay off the cost. To pay off at the rate of £500 per annum would mean, with working-expenses, a deficit of at least £1,200 per annum, a sum that we could not afford, for there are many things of pressing importance that must be done, for they are of more importance than the schooner. Under these circumstances, 1 think it better to face the position at once, and therefore recommend that the schooner be sold in March next when we have completed our engagements. We can then arrange to pay off the loss by annual instalments. I have, &c, W. E. Gudgeon, Resident Commissioner. The Hon. C. H. Mills, Minister administering the Islands, Wellington.

No. 91. Sir,- Rarotonga, 19th October, 1903. In reply to your letter No. 100, of the 21st September, 1 have the honour to report that No. 73, I have consulted the largest shippers of produce from these Islands, and they are of opinion that it would be premature to establish a second line of steamers to these Islands under existing conditions, and that it is doubtful whether a second line will be required for the next ten years unless preferential duties are imposed in favour of our bananas. I have the honour to inform you that I indorse this opinion. The present service, although in great measure restricting our fruit to the Port of Auckland, nevertheless meets the requirements of the Group, and the steamer " Taviuni " now in use, takes all the produce of the Islands, and even in the orange season when the Tahitian oranges anticipate our shipments, we have seldom cargo left behind. The " Taviuni " can take 1,200 tons of cargo. From the foregoing paragraph it will be clear to you that if the " Taviuni " can take all of the cargo we can provide, then if there were two lines of steamers they would naturally have to divide our cargo between them, and the only method by which the produce could be indefinitely produced in excess of present returns is in the banana line, and that will not be done unless some protection be afforded to the industry. I am of opinion that within eighteen months after our bananas are protected we should be in a position to keep two boats employed, but at the present time one boat is sufficient. Under any circumstances most of our trade will be done through the Port of Auckland —that is, the whole of the copra and perhaps one-half of the oranges. It is with the bananas that we hope to trade with the South Island. Wellington has of late been so bad a market for our produce that we only regard that town as a distributing port. I have, &c, W. E. Gudgeon, The Hon. C. H. Mills, Minister for the Islands. Resident Commissioner.

No. 92. g IR) _ Rarotonga, 20th October, 1903. With reference to the paragraph in your letter No. 100, suggesting that the schooner No. 73 " Countess " should collect the produce of Penrhyn and Manihiki and bring it to Aitutaki, I have the honour to point out that this is done by the schooners owned by the traders Harries and Dexter, and there is no chance of the " Countess " obtaining freight. Niue we are working for all she is worth, and this is a much better paying trade than that of the Northern Islands, as it means a full ship from Rarotonga to New Zealand. I have, &c, W. E. Gudgeon, Resident Commissioner, The Hon. C. H. Mills, Minister for the Islands, Wellington, 5—A, 3.