B.—No. 2.

3. Such an amount for military defence as Her Majesty's Government may consider utmuld fairly be charged upon a Loan, and ought not to bo borne on the ordinary revenue It is understood that the sum of £500,000, the guarantee to which was offered to Mr. Ward, is referred to under the first two heads. The object of this Memorandum is to show : — 1 The probable amount for purposes purely of military defence which the present war will cost the Colony. 2. The amount for purposes of defence charged upon the annual estimates. With respect to the first "point, the amount depends mainly upon two circumstances, the duration of the war, and the demands which the General may make upon the New Zealand Government for men. The object of the Loan Act was to enable the New Zealand Government to raise £3,U00,00J for the following purposes : — £ For defraying the cost of suppressing the present rebellion . . 1,000,000 For the introduction into the Northern Island of settlers from Australia, Great Britain, and elsewhere ....... 300,1)00 For the cost of surveys and other expenses incident to the location of settlers 900,000 For payment of compensation in respect of land taken under the " New Zealand Settlement Act" 100,000 For the purposes specified in the " Loan Act, 1862," . . . 500,000 For other public purposes 200,000 The Legislature appropriated the sum of one millie;n for defraying the Colonial charge, whie-h will come in course of payment from the ist day of July, 1863, to the Ist day of April, 1865, for suppressing the present rebellion, that is to say, for defraying the expense which it was estimated the Colony would be put to, purely for the purpose of military defence within that period. The question now is. whether that sum is a reasonable estimate. On reference to Mr. Russell's Memorandum on the measures of defence which had been taken, ii will be found that in October last year the Colony had the ib,lowing permanent forces armed and fully equipped : — Cavalry ...... 375 men. Infantry . . . . . . 2761 Since then, at least 2000 men have been added to that list, making a tofal of at least 5136 ; it has been calculated that the cost to the Colony per man of the infantry cannot be less than £90 a year, and of the cavalry at least five per cent, more, so that the standing army alone costs at the rale of £479,115 per annum. In aeldition to the permanent forces, there were; 6,483 men enrolled asmilitia ; these men have been called out at various times and for different periods ; in October, the whole male population of Auckland, consisting of 3,176 men between the ages of 16 and 55 years, was on actual service, bearing arms and doing duty as regular soldiers ; they had been so since the beginning of July, and so continued to the end of December. The whole of the male populatiou of Taranaki were on actual service, in numbers, 819 men ; in all the other Provinces the militia had been called out, drilled, and armed ; and by the last advices received fiom New Zealand, dated February 10th, lbo4, upwards of 1000 militia and volunteers trim Auckland had been called out again, and were doing duty with the regular troops. It is impossible, of course, to state with accuracy the expenses on account of militia, but tbey can hardly be estimated at less to the Colony duiing the period of the war than £200,000. It cannot, again, be expected, that let the war take the most favourable lurii possible, the New Zealand Government could get rid of paying and maintaining the Coloi ial regular forces of upwaids of 5000 men under one and a-half years in all. The estimate, therefore, of the cost to the Colony, purely for purposes of military defence, since July Ist, 1863, would stand thus: — £ Regular Colonial forces, pay, rations, clothing, and commissariat expo a s for lj yeais . ...... 718,672 Militia expenses, say ....... 200,000 Arms ......... 100,000 Cavalry horses, including remounts .... 13.500 Armstrong tuns, estimated at ...... 5,000 Fi\e steanit-rs, estimated at ...... 25,000 Military buildings, stabling, barracks, blockhouses, &c . 15,000 Tents, field equipage, &.. ...... '/0,000 £1,097,172 That the above estimate for purposes of military defence is not an unreasonable t no, the fact is adduced,-that nearly even number of the House of Representatives was of opinion that the amount voted was too small, and the Government was urged to increase it; but they hoied for the best, and felt it better not to ask for a larger loan than under tlw moat favorable circumstances it might prove neeeesaiy to laise : tl at in practice tie i.niount estimate d is not too large is clear fiom the f:u t, that by the Jast mail, Mr. Whitaker wrote, saying the expenses wcic enormously great—.that we must economise rs much as possible, or the money could l.ot be made to eke out. It will be observed, that in the abo\e ei-tn ;1e l din gis i dded ter the se miitmeiable contingent expenses that necessarily i ; rise in the tiist cataLlibLntnt of such a lorce a* this.

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