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You will notice that the letter is not signed by Sir Arthur Blyth, the Agent-General for South Australia, his Government having instructed him that they did not concur in the views of the other Colonies with regard to annexation or the establishment of a protectorate over the New Hebrides and the other islands in the Pacific, whilst they were favourable to the annexation of Now Guinea. I have, &c, SAUL SAMUEL.

No. 21. The Colonial Secretary of New South Wales to The Colonial Secretary of Queensland. g; rj Colonial Secretary's Office, Sydney, 31 July, 1883. I have the honor to acknowledge receipt of your letter of 17th instant, communicating to me the views of your Government, as expressed in a minute of your Executive Council, upon the refusal of the Imperial Government to confirm the annexation of New Guinea. In reply, I desire at the outset to assure you that I deprecate as much as any one that New Guinea should ever be taken possession of by any foreign Power, as it not only would tend to cripple the trade in Torres Straits, which has proved a beneficial enterprise both to your Colony and to ours, but would at all times, and especially in any European conflict, be highly inconvenient and menacing to the whole Australian group. Holding this view, I had no hesitation in sending, in April last, instructions to our Agent-General to state to Lord Derby that this Colony viewed with the utmost favour the annexation of New Guinea by the British Grown, in place of permitting any foreign Power to take possession of it or obtain further footing therein. . While strongly holding these views, I am not altogether surprised at the attitude taken by Lord Derby, because it seems to me that, while deeply impressed yourself with the danger to be apprehended of immediate foreign aggressive movement upon the island, you have not very definitely shown to Lord Derby the grounds for your fears, but have urged him to accept your strong feelings as evidencing the fact, rather than submitted definite proofs of the facts themselves,_ or pointed out sufficient overt acts of any foreign Power upon which he could come to the same conviction as yourself. I take a somewhat different view from you with regard to the expense of annexation. It is contrary to the English genius of colonization to be content with exhibiting the mere nominal symbol of her flag. "When England annexes she must govern —she must rule. She cannot be content with the " laisser faire" system which you point out as having been followed by the Dutch,—not interfering with the aborigines, but waiting aiid simply holding the country as against any other Power. It seems to me, therefore, to be unwise to brush aside the matter of expense as a mere fancy; it should, on the contrary, bo fairly looked at, and a division suggested as to the proportions to be borne by the countries interested. The Imperial interests are probably as great as the Australian, and the Colonies would doubtless respond to any liberal basis for its apportionment. I have always looked upon the question of Federation as one which would not probably assume a definite shape until the outward pressure of some common danger compelled the various Colonies to sink many minor differences and jealousies in the necessity for combined action for common safety. Whether such danger exists in the present refusal by the Imperial Government to recognize the action you have taken with regard to New Guinea, I feel hardly called upon at present to decide; but I gladly accede to your suggestion that the question of Federation should be discussed by the Colonies, and if it be considered that the present is a fitting time, then that such discussion should take the form of putting forward the basis on which a Federal Government could be constituted. This Government is also prepared to accede to your request to urge upon the Imperial Government that it is desirable that the question of annexation be reconsidered ; and with that view I have addressed a letter, inviting His Excellency Lord Augustus Loftus to lay our views before the Secretary of State for the Colonies, and of such letter I beg to hand you a copy. I have, &c, ALEX. STUAET.

No. 22. The Colonial Secretary to His Excellency the Governor. My Lord, Colonial Secretary's Office, Sydney, 1 August, 1883. I have the honor to address you on the subject of New Guinea annexation, with the view of inviting your Excellency to convey to the Secretary of State for the Colonies the views of this Government. I'beg to enclose a copy of a communication received from Sir T. M'llwraith, with a minute of the Executive Council of Queensland, and of my reply thereto. I would respectfully urge a reconsideration of the question by the Imperial Government, because that although I am not prepared to say that there was an imminent prospect of New Guinea being taken possession of by any foreign Power, yet I do fear now that the prominence which has been given to the subject will of itself cause some nation to take it up as a strong strategic point in the future domination in these seas. From its close proximity to the northern part of Queensland, and from the control over that important highway of commerce—Torres Straits, which would bo given to any possessor of the southern shores of New Guinea, its occupation by a foreign nation might bo, in the event of a European war, most disastrous to Australia, and therefore to British interests. I was at one time inclined to think that a protectorate of the Southern Coast would have been sufficient, and even yet it may be so if its effect would be to keep any other nation from obtaining a footing; but if a protectorate be inefficient for that purpose it would be better to accept the annexation, so that there might be no ground for the future disquiet arising from foreign settlements so close upon our shores. I naye > &c -> ALEX. STUART.

See Nos. 19 & 21

No. 23.