D.— No. 5.

"What I do feel it to be my duty to say to you, plainly, is that the aid of the mother country in men and in money is given to the colony on the understanding that the military measures which have unhappily become necessary, shall be directed by you in concert with the distinguished General in command. I shall be perfectly ready to support you in any measures which, not breaking any positive law of the colony, and after consulting with the General, you may have thought it necessary to take on this subject. I earnestly trust, however, that that sense of the consideration due to your position, to which in your Memorandum of 29th April you appeal, will have been manifested by your Advisers ; —and that, more especially, when they shall have received the full and deliberate statement of the views of Her Majesty's Government, conveyed to you in my despatch of 26th April last, they will cordially co-operate with you in the measures which you. may feel called upon to adopt in pursuance of your instructions. I am confirmed in this hope by the assurances which Mr. Reader Wood on the part of his colleagues and himself lias given me, as you will have seen in his letter to Sir T. Rogers, and by the tone which Mr. Eeader Wood has uniformly maintained in his frequent communications with me during his stay in England. I cannot for one moment believe that your Ministers will be actuated by any other feeling than a patriotic desire to aid you to the utmost of their power ; and I trust that, even when their opinions may differ from your own, a paramount sense of public duty will induce them to forget these differences and cordially to support your efforts and those of General Cameron to promote the cause which equally witli yourself they have at heart. I enclose to you a copy of the Bill which has passed the House of Commons, and been read a second time in the House of Lords, for guaranteeing to New Zealand a loan of one million sterling. I hope that by the next mail I may be able to inform you that it has received the Royal assent, and may convey to you the instructions under which it will be necessary for you to act in order to obtain by the Assembly of New Zealand, the adoption of the conditions on which that guarantee has been conceded by the Imperial Parliament. . I have, &c., Governor Sir George Grey, X.C.8., <&c, &c, <fee. Edwakd C.vrdwelt,. Enclosure to No. 38. A Sill intituled " An Act to guarantee the Liquidation of a Loan for the Service of the Colony of New Zealand." Whereas by an Act of the General Assembly of New Zealand, passed in the twenty-seventh year of Her Majesty, intituled, " An Act for raising a Loan of Three Million Pounds Sterling for the Public Service of the Colony of New Zealand," it was enacted, that it should be lawful for the Governor oi New Zealand to appoint the Agent or Agents therein mentioned, with authority to borrow and raise on behalf of the said Colony such sum or sums of money not exceeding in all three million pounds sterling as the said Governor might direct: And whereas it is expedient that the Commissioners of Her Majesty's Treasury should be authorised to guarantee the payment of interest and repayment of the Principal of part of the sum so to be borrowed, not exceeding the amount of One million pounds sterling, upon the conditions hereinafter mentioned: Be it therefore enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this Present Parliament assembled, and by the authority of the same, as follows : — 1. The liquidation of all such sums, not exceeding in the whole the sum of One million pounds, as shall be borrowed and raised in Great Britain, with the approbation of the Commissioners of Her Majesty's Treasury, under the said first-recited Act of the General Assembly of New Zealand, or of any Act passed in amendment of the same, together with the interest thereon, not exceeding the yearly rate of four pounds for one hundred pounds, shall be guaranteed under this Act; and for giving effect to such guarantee, it shall be lawful for the Commissioners of Her Majesty's Treasury to direct and cause to be issued and paid out of the growing produce of the Consolidated Fund of the United Kingdom of Great Britain and Ireland, such sums as shall be required to make good any deficiency which shall happen in the regular payment, on the part of New Zealand, of the interest accruing due upon such sums as shall be borrowed as aforesaid, or in the liquidation of the principal sums when the same shall become payable. 2. Provided nevertheless, that it shall not be lawful for the Commissioners of Her Majesty's Treasury to approve the borrowing and raising of the hereinbefore mentioned principal sum of One million pounds, or any part thereof, until provision shall have been made by the General Assembly of New Zealand to the following effect, that is to say : — (1.) That every part of the said principal sum shall be repayable and repaid at the expiration of thirty years at the furthest from the day on which such part shall have been borrowed and raised: (2.) That for the purpose of providing a Sinking Fund for the liquidation of the said principal sums, a sum equal at the least to two per cent, per annum on the total of such principal sums shall be paid yearly, and invested and increased by way of accumulation in the manner directed by the said' first-recited Act in respect of the Sinking Fund therein provided for : (3.) That the said principal sums and all interest thereon, and the said annual sum of not less than two per cent, for Sinking Fund, shall be a charge on the general revenue of New Zealand, having priority over all other charges upon the said revenue, except charges created in virtue of an Act passed by the said General Assembly, intituled, " The New Zealand Loan Act, 1856," and of an Act of Parliament passed in the twenty-first year of Her Majesty, intituled, "An Act to guarantee a Loan for the Service of New Zealand," or either of them, and that the said general revenue shall for the purposes of this Act be deemed to include all the revenue which shall arise from duties of import and export, from Post Office receipts, and Supreme Court fees, from the disposal of Waste Lands of the Crown, and from all taxes, duties, rates, and imposts levied or to be levied by virtue of any Act of the General Assembly of New Zealand, and all revenues whatsoever which may be lawfully expended or disposed of by the authority of the said Assembly :

18

DESPATCHES FROM RIGHT HON. E. CARDWELL, M.P.