to convey these Pensioners to their destinattm, provided that ihey shall have performed their duties to your satisfac ion I have the honour, &c., &c., (Signed) Gbey. Governor Grei', See., &c. (Copy.) No 33. Military. Wellington, New Zealand, February Bth, 1851. My Lord, — In compliance with your Lordship's i structions that I should furnish a comprehensive Report on the general expenditure incurred for settling Pensioners in the C<>loiy of New Zealand distinguish! ig the c >st of houses, working, pay, and other principal branches of expense. I have now the honour to transmit a Report which has been dr iwn up by the Auditor-General of New Ulster for my information, but which appears to me to be so complete and useful a document that 1 have thought it right to forward it t> your Lordship in its present form; and I think that the details of the financial par of the subject are so fully and clearly treated in the Report, that I nee i not attempt upon those poin;s to trouble your Lordship with any further remarks. 2. Upon the general financial effects of this plan of military colonization, and the source from which the cost of it should be paid I be>j to offer the followiuc , observations. 3. The total expenditure in New Zealaud upon account of the location of Pens : oners in this colony has up to the present date beet} 59,2-i9£. 12s. 4d., the details of which expenditure are fully set forth :u the Report of the AuditorGeneral. 4 Upon the other hand, it is to be stated that owing to the presence of the Pensioner Force in th s country your Lordship has bee.t already enabled to direct a reduction in the military force serving in New Zealand, which it will be found on examination of the enclosed Krturn for ths Southerh Province, will e ect an annual saving of military expenditure for the whole of New Zealand which cannot be estimated at less than 3,00301.; so that in two years from this source alone a saving will be effected by Great Britain which will more than repay the whole cost of the plan ; and this saving will be greatly increased in a few years by the still further reduction in the military force, which it will be practicable by degrees to carry out. 5. But the state of tranquillity of this country, which the presence of the Pensioner Force hai tended very greatly to promote and confirm, has also enabled a large reduction to be made in the Naval Force serving in New Zealand ; *rid the great increase of population caused by the presence of the Pensioners and their families, has also added largely to the Revenue, and has enabled the Parliamentary grant in aid of the Local Revenues to be considerably reduced. 6. It is thus evident that, as a mere financial operation, even if the whole of the cost of this experiment were defrayed by Great Britain, still that a very large saving will have been effected by it for the mother country. 7- This colony has been also undoubtedly greatly benefitted by the introduction of Pensioners ; the single instance of the great increase in the value of Lands as stated by the Surueyor-General sufficiently proves this. It appears from his calculations that in those hundreds alone in which the Pensioners are located, the lands the property of the Crown are now of the folio win"- estimated value:— ° Howick £ 18,890 0 0 Panmure 5,372 0 0 Otahuh-i 10,152 0 0 Onehunga.. 32,997 10 0 Making a total of £67,411 10 0

1 Enclosure No. 1. Report dated 25th November, 1851). , Report ot | General. Vide Blue ' Book of 7th August, ' 1831. Page 145.

Enclosure No. 2. Ap- ; proximate estimeted [ Lieut.-Col. McCleverty, of decrease of Military expenditure ■ per annum in the ; Southern districts of a New Zealand. 3 For Lleut.-Colonel M'Cleverty's estimate Vide Blue Beofc 7th August, 1851, page ; 1.50-51. 1 I I