B.—No. 2.

the Provinces from the construction of railways and from immigration; that it is wise to stimulate the Provinces to colonizing enterprise, by making the concession of an increased revenue for settlement purposes, such as we propose ; and that the Colony, but for the Native disturbances, could not only afford the increase, but could reduce taxation as well. It is to be remembered, also, that our proposals embrace a specific allocation of a portion of the money payable to the Provinces, to particular and well-defined objects. When I come to the Ways and Means, I have no doubt the Committee will see that the proposals we make, although liberal to the Provinces, are not more so than the Colony is warranted in making. Ido not dwell on the extraordinary results the division discloses as to the unequal working of the present system. Honorable Members will doubtless conceive strong opinions concerning the justice which the Provinces have hitherto received. Canterbury has clearly lost some revenue belonging to it, or revenue payments within the Province have been evaded; Westland must have been drawing revenue from imports consumed on the Nelson side of the border. INTEECOLONIAL TEADE AND INTEECHANGE. For some time, considerable attention has been directed to the subject of the restrictions under which the Colony labours in respect to entering into commercial relations with other countries and colonies. In 1868, I brought down a Resolution urging the Government to enter into negotiations for procuring the iai admission of Colonial wools into the United States duty free. I then pointed out the hardship under which the Australasian Colonies laboured, seeing that the British-American Colonies had for a long while been permitted to enter into reciprocal arrangements. The late Government accepted the Resolutions, and, in pursuance of them, '• made arrangements for a Conference of Representatives of the different Colonies. The Conference was to have been held in October last, but fell through, owing to some of the Colonies not being prepared to proceed with it. Dr. Knight and I went to Australia for the purpose of attending the Conference; and when we found that it would not take place, we entered into communication Avith the New South Wales Government. lam not able to submit to you all the arrangements to which we agreed, because those arrangements were subsequently disturbed by the Queensland Government declining to become a party to them. Incidentally, however, in a correspondence to which I am about to refer, one of the Memoranda agreed to in New South Wales finds a place. It was attached to a letter written to Tasmania, before Queensland's withdrawal was known to the Government. I think I may add, that the withdrawal of Queensland was not dictated by any objection to the particular Memorandum to which I am referring. The correspondence with Tasmania arose through the desire of that Colony to arrange another Conference. This time, the express object was to bring about what is known as a Customs Union between the Australasian Colonies. The meaning of a Customs Union is, that the Colonies should agree to a uniform Tariff, and that goods cleared in any one Colony should be admitted duty free to the other Colonies. There are various proposals as to the mode of dividing the total revenue amongst the different Colonies ; but to these I need not refer, because, as will be seen by the correspondence, the Government at once expressed their total disapproval of any arrangement which would prevent the Colony from freely dealing with its own Tariff. lam not saying that, in the event of a Federal Union between the Colonies, a Customs Union might not also be necessary; a Customs Union by itself, however, we decidedly condemn—that is to say, a Union which would prevent our varying our Tariff from time to time, and making it suitable to our own wants. But we fully recognize the advantages of i reciprocity. The first mail to California carried a correspondence having for its object to urge the United States to consider the question of relaxing the restrictions upon the admission of Colonial wools. This correspondence has been laid before you, together with that already referred to. As something has been said about our Government not having addressed the United States Government direct, I may mention that we had reason to think the course we adopted was

Admission of Coloni into°UmtedStatee.

Colonial Conference

An Australasian butSrcotonwi

objected to Reciprocity desired,

Correspondence with OovCTnlm°ent 3t''ltes

24

EINANCIAL STATEMENT.