And the value of land in the Hundred of Auckland must also have been very greatly increased by the presence of the Pensioners and the consequent icrease of population ; indeed the value of thr public lands throughout the whole Northern District must have been already greatly increased from this cause, whilst evidently the value of the property of private individuals must have increased in exactly the same proportion as land which is the property of the Crown. 8. This increase in the value of lands, and in the amouut of the Revenue which has been obtained for the colony, is also not a mere temporary effect; for the Pensioners being nearly all married men with young and he.dthy families, the value of landed property and the amount of Revenue must increase year by year with the already rapidly augmenting wealth of the Pensioners, and in propoition to the increase of population attributable to themselves and their families. 9 Should, therefore, Her Majesty's Government determine, in the terms of your Lord>hip's Despatch No. 58, of the 20th of March 1 st, that ail the charges of the location of the Pensioners in New Zealand shall eventually be defrayed from the Land Fund of this colony, there can be no doubt that in some years it could bear such a charge, and probably that if it w ere 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 de fray the whole of this debt, because much at the present moment depends upon a European population being steadily poured into New Zealand. An increase in the European population will, by strengthening one 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 ultimately be 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. 10. I will, however, make every effort at the termination of the present financial year, ISSO-51 to cause the 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. I also beg to state that your Lordship's Despatch of the 20th March, 1850, did not reach me until the Bth of October, just before I quitted Auckland, and that it is from this cause that lam not in possession of the necessary information to enable me to state the precise amount of the claim made against the Colony, which it may be in the power of the local Government to defray during the current year. 11, In order that the whole subject may be placed before your Lordship in a complete and connected form, I have put up with the other papers transmitted in . this Despatch a Return showing the extent and value of the pre-emtion land purchased by the Pensioners in the last quarter, from which your Lordship will see that they are already themselves becoming considerable purchasers of land, thereby clearly showing that a great benefit has been conferred upon themselves and their families by their removal to a country where in so short a time they have been able to effect so vast an improvement in their circumstances. I have the honour, &c., (Signed) G. Grey. The Right Horn Earl Grey f &c.,. &c. No. 161. (C ° Py) Finance. Government House, Wellington, August 20th, 1851. My Lord, — Adverting to your Lordship's Despatch, Military, Nos. 61 and 67,

Enclosure No. 3. For which «ee Auckland Gorernment Gazette, No. 261, pages 8 and 9,