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predominantly European in character were transferred to the control of the Education Boards and were thus merged into the public-school system. The number of schoo's now operating and the number of pupils in attendance represent the high-water mark in the history of the schools in this connection. As an indication that the number of village schools necessary has not yet reached the maximum limit of expansion, it is practically certain that five additional schools will commence operations during the current year. There are still settlements with a small but increasing school population where schools may be eventually established. Concurrently with the expansion of the system there has been steady and unmistakeable progress in the efficiency of the schools, and it can be reasonably maintained that Native schools from the point of view of efficiency do not suffer by comparison with the ordinary public schools of the same grade and somewhat similarly situated. Moreover, European pupils who from choice or force of circumstances attend Native schools suffer practically no serious educational disabilities in doing so. The Native village schools have played a most important part in removing the prejudice of the Maori people towards the pakeha and his ways, and have rendered signal service in the civilization and general uplift of the Maori race. The progress in Native village schools has all along been regarded as of the first importance, since on that the whole fabric of the educational advancement of the Maori depended. The wisdom of the authorities in the early days in placing school buildings of European construction in Native settlements, and of appointing as teachers Europeans who, with their families, have served as exemplars of European family life, customs, and civilization, has been amply vindicated, and the system is still being followed out. The Maori people in the districts served by village schools show great interest in educational matters and are keenly appreciative of the benefits of these schools. It is not always a simple matter for those unacquainted with the actual conditions to realize just what the schools and the teachers, quite apart from the education of the children, mean to the Maori communities. The school is the centre of a social influence which affects the people in many different ways ; and with teachers who grasp the possibilities of the situation an immense amount of valuable work can be done in raising the level of Native life. The great majority of the teachers in charge of Native schools recognize the possibilities and do valuable community service. They discharge their duties faithfully and efficiently, for the most part in remote and isolated localities, and often under great disadvantages, and it is only right and proper that in a review of the year's operations appreciation of the services they render should be recorded therein. From the returns available from village schools, mission schools, schools providing secondary education for Maoris, and public schools the number of Maori children receiving instruction at the end of the past year was approximately fourteen thousand. In connection with the work of examining and inspecting the schools I have to acknowledge the assistance rendered by Mr. Henderson, Inspector of Native Schools. I have, &c., John Porteous, The Director of Education. Senior Inspector of Native Schools.