Whatever doubts may have been entertained as to the liability of the colony for the expenditure incurred by the Imperial Government in providing houses and employment for the Pensioners, were set at rest by Ivirl Grey s letters to the Treasury, dated the 20th February, 1850. In the former His Lordship stated that he had no reason to doubt that any expense incurred in employing the Fencibies, would be provided for by tlie Governor of New Zealand from the resources placed at his disposal either by the vote of Parliament, or by the Colonial Revenue ; and in the latter communication the Treasury was informed that the expenditure for the erection of cotta-es ought to be a charge upon the revenue of the colony on that account, the Governor would be instructed to use every endeavour to discharge the debt by economising the general resources, including the Parliamentary grant, which are placed at his disposal for carrying on the Colonial Government. Governor (irey, in his Despatch to Earl Grey of the Bth February, 1851, after adverting to the advanlages botn to the mother country and the colony already obtained bv the formation and settlement of the Pensioners, remarks— " Should therefore Her Majesty's Government determine that a 1 the charges of the location of the Pens oners in New Zealand shall eventually be defrayed from the Land und of this country, there can be no doubt that in some years it would bear such a charge, and probably that if it were then called upon to defray it, that the colony would hardly feel such an exertion ; but I submit that if possible it should not, at least for the present, be called upon to defray the whole of this debt, because much at the present m ;ment dependes upon a Huropean population being steadily poured into New Zealand. An increase in the European population will, by strengthening our race, tend rapidly to diminish the cost of Naval and Military protection, whilst the increase in the revenue and general wealth of the colony will enable it to defray, much more rapidly, and with much less difficulty, such portion of this debt as it may be ultimately determined to charge against it. " I feel satisfied, therefore, that by adopting the policy of not requiring the colony, at least for the present, to pay the whole of this charge, your Lordship will take that course which will ultimately effect much the largest saving to Great Britain, and tend most to the promotion of the prosperity and wealth of this country. " I will, however, make every effort at the termination of the present financial year, 1850-51, to cause a sum of at least six or eight thousand pounds to be paid from the Parliamentary Grant and Land Fund in part liquidation of this charge " No payment appears, however, to have been made into the Commissariat Chest by the Governor on aecount of the location of the Pensioners according to the last advices received at the Treasury, and no specific vote appears to have been taken with the view of relieving the Commissariat Chest account of the advances made in pursuance of the arrangements of November, 184(i; and thus a sum of £6J 081 15s. Bd. remains to be repaid to the Commissariat Chest Fund, which, with the amount of A''),479 9s. 9d. charged to the Ordnance vote, and thit of £2,145 10s. 9d. expended by the Ordnance Department in 1851-2 and 1852-3, but temaining unadjusted, constitute a claim against the colony for Fencible services to the extent of £69,706 l6s. 2d. Subjoined is a carefully revised account of the whole expenditure incurred by the several departments at horue, as well as the outlay chargeable on the colony for the Royal New Zealand Fencibies, according to the latest advices received in this country by the Treasury, the Board of Ordnance, and the Commissioners of Audit.

Liabili-y of the Colony for advances for Feasible services.