B.—No. 2

time was not stated, but it is very clear that the estimate of ono million for purely military purposes i* more likely to be exceeded than not. (Ji) The sum of £500,000 for the purposes specified in the Loan Act of 1862, for which the Imperial guarantee was offered to Mr. Ward, but declined by him, it is supposed, under some misconception of the conditions whicii were attached to the offer. The purposes to which that was to have been devoted were: Payment to Her Majesty's Government . . 200,000 Reinstatement of Taranaki settlers . . 200,000 Taranaki Militia and military road to Tataraimaka . 100,000 £500,000 (c) The sum of £1,300,000 will bo applied to the several purposes of introducing Immigrants into the rebel districts of the Northern Island capable of bearing arms to occupy such strong natural positions as will practically give to the Europeans the command of the country, arming them, constructing roads, rendering rivers navigable, Ac, for the double purpose of rendering those settlements accessible anel available, and of giving employment to the Immigrants on their arrival. (d) The sum of £200,000 for Lighthouses and Electric Telegraphs. It will be observed that the first two sums of one and a-half millions aro purely to defray the expense of military defence ; about the purposes to which they are to be devoted, there is scarcely anything attaching of a reproductive kind. With reference to the third sum of £1,300,000, it is admitted that ultimately much of that expenditure will be reproductive, and generally beneficial to the ordinary progress and advancement of the Colony, at the same time it should be recollected that it is forced upon the Government as necessary for the pacification of the rebel districts. The Government cannot take their own time about these operations as they would about ordinary Immigration and Public Works ; they cannot await a favourable state of the English money market, of their own labour market, and their finances, but they are compelled to commence this expenditure at once. With reference to the fourth item of £200,000, it is purely a matter of ordinary expenditure, the sum was included in the loan of £3,000,0.00, only because it was thought better to consolidate the whole in one Act; were it not however for the native disturbances, and the extraordinary expenditure caused thereby. New Zealand would be able, out of its ordinary revenue, and without raising money by loan, to light the coast, aud provide communication by electric telegraph between all the settlements of the colony. 2. The New Zealand Government was desirous of appropriating as large a sum as possible out of the ordinary revenue, in addition to the annual charge for troops, for the purpose of maintaining a considerable and permanent militia staff, and for that purpose an amount equivalent to £50,000 a year, was voted during the last Session of the Assembly. It is observed that the expression " unusually large revenue" is used. In estimating the revenue of New Zealand, it should be borne in mind that the insular position of the Colony, its numerous harbours, and the plan that has been adopted in its colonization, of scattering settlements in every part of the Colony, require a much larger departmental expenditure relative to population, than would be required under circumstances similar to those of the colonies of Australia. Take for instance the matter of Customs, and tho same rule applies to other departments. If there were but one principal port in the Colony to supply the whole population, as is the case with Victoria, New South Wales, and Queensland, the same amount of Customs' duties could be collected at one-fourth the cost which it is now necessary to incur in a Colony where there are nine principal ports, and twice as many minor ports, in each of whicii it is necessary that a Customs' staff, more or less considerable, should be maintained, so that practically, although the revenue is admitted to be large and flourishing, the Finance Minister has no considerable surplus at his disposal after providing for the necessary establishments, interest on money borrowed, militia, and the other expenses which must necessarily be incurred. The gold discoveries too, which have been mainly the cause of the large revenue, have added in an equal proportion to the expenses of the Government of the Colony. 3. The security for the loan is complete, independently of the conjectured proceeds of sale of confiscated lands ; it is secured on the ordinary revenue of the whole Colony, that is to say on the revenue arising from Customs, Post Office, judicial fees, fines, &c, amounting actually for the financial year last past, to £549,963, and estimated to amount during the current financial year to £691.600, of which during the six months ended December 31, 1863, the receipts arising from Customs' duties alone exceeded the estimate by £15,000. For full details upon all these points, reference is made to Mr. Russell's Memorandum on Military Defence, the Financial Statement, and the Memorandum accompanying the Loan Act by the Colonial Treasurer. Reader Wood. Sir Frederick Rogers requested that it should be shown that New Zealand was in a position to pay the interest on the Loan. It was shown as follows : Amount of interest and sinking fund on loan, if guaranteed . £150,000 If not . 180,000 Amount provided in estimates of current year . £10,000 Revenue of current year beyond estimate . . 30,000 Increase of revenue, estimated at ten per cent.—the rate of increase for the last live years being from 15 to 44 per cent. 70,000 Estimated increase of Customs revenue on introduction of 20,000 Immigrants .... 50,000 £190,000 An amount sufficient to cover interest and sinking fund, should the whole loan be raised.—R.W.

20

PAPERS RELATIVE TO