specific purposes. The schedule of that Loan Act is divided into two parts; the first division, for the re-instatement of Taranaki, was £200,000, ami the second division of £300,000 was for the purpose of repaying Imperial demands for road*, public works, and other purposes. The Imperial guarantee to that loan has not yet been obtained. As all the correspondence that has taken place with reference to it has been laid before Hie I! misc. it is unnecessary for me to enter iuto minute details. The guarantee, however, was not obtained. First of nil, there was considerable delay on the part of the Imperial Government in sta! im; to Mr. "Ward—who waa sent home to make arrangements with reference to that guarantee—what they would do and what they would not do ; however, they ultimately proposed certain terms to Mr. "Ward, subjed to which they were willing to grant it. Mr. Ward declined to accede to those terms. His reasons for taking this course have been given fully in the papers before the House. The Bill which the Government bad introduced into the House of Commons was then withdrawn, and it became impossible to take any further action in the matter. No payment therefore has been made to the Imperial Government on account of their demands, and in fact the Colonial Government has had no portion of the loan at its disposal, with the exception of £100,000, which they were authorised to raise by Exchequer bills, until the Imperial guarantee could be obtained. 'These Exchequer bills have been neu'w'iated to the amount of £100,000, and I will now state to the Committee the manner in which these funds nave hoen expended. On account of the first division of that loan, namely, £200,000 for Taranaki reinstatement, the following sums have been expended to 30th June' 1863 :—

£ c. d. Payment to Taranaki Relief Commissioners ... 37,934 7 9 Passages to Refugees - *l " " " " 75 10 0 Expenses of Governor and Suite ai Uaranaki ... Bgg 7 2 Transport of Captain Mercer's Mounted Corps - - - 800 0 0 Military buildings at Tataraimaka and Stables for Mounted Corps 1,007 7 8 Saddlery, pay, arms, &c, of Mounted iJorps ... 397 7 4 Militia pay .... ... 9^oB 12 10 Expenses connected with German Immrga! ion Agency - - 287 15 0

£51,509 7 8

Sir, I am perfectly aware that opinions will differ materially as to the exact meaning and interpretation to be put on the first division of the Loan" Act. I suppose there° will scarcely be two members in this House who will agree a* to the exact meaning of the Legislature when they passed that Act. But, sir, jt has always appeared to me That there are two things which the Legislature required to be done out of this fund; first, it was necessary to restore the peace and security of Ihc Province; and, secondly, by the distribution of a certain amount of capital to the settlers after the security of' tlie settlement had been restored, to enable them not only to re-occupy their land if they chose, but to give them a fresh start in life; not so much to restore the settlement to its former state, as to "ive it "a new start altogether. Sir, at the time that that Loan Act was passed, there wore considerable expenses still going on in the' Province of Taranaki with reference to the milii ia. There was a large militia force then embodied and they had to be paid, and it was impossible to disband them. It was also necessary, before the peace and security of that settlement could be restored, that possession should be regained "by the Crown of the Tataraimaka block. Now, as the House voted no funds specially for Taranaki, or for the continuance of that military expenditure, except the sum of £200.000, I considered, and consider still that the military charges which I have just detailed were a fair charge upon that reinstatement fund.' But, sir, I am aware that this view of the question is disputed by those who are most concerned and most interested in the matter, and, if it is possible to do so, an arrangement will be conio to between the Government on the one side and the Representatives of file Province of Taranaki on the other with reference to the appropriation of the reinstatement fund, if such can be done in accordance with th< Attorney-General's interpretation of that portion of the schedule to the Loan Act. If that cannot be done, the Government propose again to appeal to this House upon the question, and to request the House definitely to state what it does mean by that vote. Then, sir, with regard to the second dirision of the Loan Act, the £:>OO,OOO for repaying Imperial demands, public works, or other purposes the following sums have been expended :— '

. £ s. <i. Roads, Province of Auckland ----- 11 982 16 1 Stockade at Raglan --._-_ 722 13 ° lioads, Taranaki -•-.__. 19 052 18 1 Arms (7.JJ2 2 8 37,870 9 7

Thus the total of the 100,0007. that has been expended is 59.439 Z. 17s. 3d. Sir, the legislation of last Session renders it unnecessary for me to say anything with reference to an account that has been frequently debated in this House, the account known as the Reserved Sixths Fund. By that legislation it became my duty to refund the amounts which the Treasury held on that account to the different PAvinees. That has been done, with the exception of the Province of Hawke's Bay. The Treasury now holds 2,000 Z. of this fund, sold/ for the purpose of meeting engagements which the Land Purchase Commissioner had entered into, bul has not yet completed. Then, Sir, there are certain special accounts which it is necessary 1 should refer to, the main item of which is the Bay of Islands Settlement Act and 1 will state to the House what we propose to do with reference to the expenditure which has been incurred on that account. I will, first, however, give the items advanced under Acts of Assembly :

7

A.—No. I

OF THE GENERAL ASSEMBLY.