E.—No. 2.

From conversation with Mr. Smith, Mr. Clarke, and Mr. Faulkner, I had come to the conclusion thatall the Natives on the Auckland side of Tauranga Harbour are engaged in the rebellion, —thatthey are connected with Wm. Thompson, —in fact part of his people, and that they have for the most part been engaged in active hostilities. 24th January, ISO 4. Fbsdk. Wuitakjsb. John Faulkner, of Tauranga : I have been in New Zealand thirty-one years. I married a native of New Zealand I have recently come from Tauranga,because it is not safe to stay there. The Tanranga natives are divided into two parties ; those on the oast side of the harbour have not gone to the war, they are divided in opinion ; part want to go to the war and pnrt to remain at home. 'Piiose on the west side have all gone to the war. every man except thf old men ; they are connected with Thompson, he has a sort of hold on them. John Faitlkneb. A part of the Natives have been planting in the forest as a stand-by, expecting something would be done at Tauranga by the Government. Daniel Sellars: I have been trading to Tauranga these last twelve years. I came up from there about a week ago. The Natives on the west side of the harbour are all King natives, —there is not a village that has not sent its contingent to the war. When I was there a week ago, many were going, and many were there already : a few were left to cut the crops. Daniel Sella.es. No. 7. COPY of a Letter from Native Seceetaet to Mr. T. H. Smith. Colonial Secretary's Office, (Native Department), Auckland, 25th January, 1864. Sib, 1. I am directed by the Colonial Secretary to acknowledge the receipt of your letter dated January 22nd, covering copy of one addressed by you to Colonel Carey. 2. The Colonial Secretary desires me to state that it was not the intention of the Government, that the information conveyed to Mr. Baker in his instructions, should have been communicated by you to the Natives by circular, as you report yourself to have done. Had the Government desired any such steps to have been taken, they would not have failed to instruct you to do it; and they cannot help remarking that should it be found necessary for Colouel Carey to take any aggressive measures against those Natives of the Bay of Plenty District, who are either actively engaged in the Rebellion or aiding and abetting it, the step taken by you must place both the Government and yourself in a very false position towards the Natives to whom you have conveyed an assurance that no such step should be taken. As you have acted entirely without instruction, the responsibility of your act must rest solely with yourself. 3. I am directed also to express the surprise of the Government at the information contained in your letter under notice, and in that addressed by you to Colonel Carey, in which you state that there are very many individuals, and more than one considerable section of a Tribe who have not committed themselves ; " and that the result of treating all Natives on the western side of Tauranga Harbour, as rebels, would be to inflict injury on many innocent persons and increase the number of the disaffected." During your late visit to Auckland, the Attorney-General and Colonial Secretary both understood you to state to them, while inspecting the map of the district in the Attorney-General's office, that a welldefined geographical line could be drawn between all hostile and friendly tribes of the Bay of Plenty; and that those on the west side of the Bay were almost to a man committed in the Bebellion ; that the greater part of them had been actually fighting in Waikato; that they were in fact W. Thompson's people, and the district in which they lived practically under his direct influence. This information (subsequently confirmed by five or six other gentlemen intimately acquainted with and personally interested in the district), induced the Governmont to advise His Excellency to issue to Colonel Carey the instructions which he gave that officer. 4. As the tenor of your letters to the Colonial Secretary and to Colonel Carey most materially differ from your previous oral statement, it becomes of the utmost importance that the Government should have immediate and accurate information on the subject. You will be so good therefore as to ascertain as accurately as you possibly can, and inform the Colonial Secretary what particular hapus, or proportion of hapus, or the population of what particular kaingas, have been actively engaged in the war, have hoisted the King flag at their places, or otherwise given distinct indications of their complicity in the rebellion, and also what hapus or village* may be considered qime free from all open participation in the rebellion. You will also communicate such information to Colonel Carey, so that he may not be paralyzed by the vague information you have given to him. m case he should consider it his duty to take active operations against supposed rebel Natives on the west side of the Bay. 5. The Government will be glad to receive any explanation you may have to offer of the discrepancy which exists between the statement contained in your letter referred to. and that made to the Government when in Auckland. I have, &o. Edwaed Shobtland, Native Secretary.

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PAPEftS RELATIVE TO NATIVE AFFAIRS.