A.—4.

provide any further expenditure they may approve. Imperial contribution will be the gift of suitable ship, costing, when delivered at New Guinea, not less than £18,000. This offer made in full confidence that your Government will as soon as possible obtain from Legislature Act to secure permanent annual proportion. On proclamation of sovereignty Scratchley would have full legislative powers and control over all nationalities." I am not as yet in possession of the replies which have been addressed to the Secretary of State. I believe, however, that Queensland has intimated that her proportionate quota has been provided for by Act of Parliament. From the other colonies I understand that no definite acceptance has been received. After conferring with Mr. Griffith, the Prime Minister of Queensland, I arrived at the conclusion that he is prepared to take the initiative in the negotiations which it will be necessary to renew. My duties will shortly place me beyond the operation of telegraphic communication, and, indeed, outside the area of ordinary correspondence. It will be well, therefore, that I should now endeavour to express my own opinions as to the requirements of the future government of British New Guinea. I assume, in the first place, that, as among the Australasian Governments, Queensland is the most interested in the proper administration of affairs in British New Guinea, so to that Government the chief responsibility will attach in following up the negotiations with Her Majesty's Government. In the absence of more defined powers in their federal capacity the Australasian Colonies must still be dealt with separately in this matter. If, however, a substantial agreement could be arrived at between Her Majesty's Government and the Government of Queensland, a considerable advance will have been made towards a solution of the problem. Queensland being primarily responsible, I assume that the contributions in aid from the other Australasian Colonies would be a matter of easy arrangement. The annexation of New Guinea was first suggested by Queensland. This led up to the proclamation of the Protectorate. It is evident, and Her Majesty's Government have clearly admitted this, that Her Majesty's sovereignty must follow. In order that this may be effected it will be necessary in the first instance to supply the framework of a Civil list, upon which to build up the structure of an ordered Government. Queensland may, with perfect propriety and without incurring any serious financial liability, accept the sole responsibility of guaranteeing the whole of the sum required. I assume at once that it may, for such a purpose, bo necessary to make an annual appropriation of £20,000, and that this appropriation should be secured for five years. The capital amount thus represented, namely, £100,000, might be secured to Queensland as a first charge on the territorial revenues of British New Guinea. In the meantime a modus vivendi would have been established. Queensland would, under these circumstances, very justly claim to be consulted in the framing of the estimates, and in seeing that the money was appropriated in accordance with such estimates. As regards administration and legislation, Queensland would also justly claim to shape the general direction of policy, and to define the principles under which the Government of the new State was to be conducted. Just as Her Majesty's Government directs the affairs of the Empire, so the ■ Government of Queensland, acting on behalf of the Australasian Governments, would supervise the Government of New Guinea. But the Government of New Guinea must, for some years at least, be primitive and paternal, dependent much on personal influence. Native customs must be recognized ; native rights must bo respected. This, in any agreement made with Her Majesty's Government, should be clearly defined, and should be a fundamental article in the Constitution of the new State, when the Queen's sovereignty is confirmed. There are other provisions which might find a place in the proposed Constitution. Mr. Griffith, hosvever, who is so familiar with constitutional law, and with the Queensland code, will have no difficulty in taking security that the wishes of the Queensland Parliament in this respect are enforced. These leading principles having been defined, and embodied in the proposed Constitution for British New Guinea, I do not think that any attempt should be made to exercise any minute control over the administration. Ordinances would be passed by the Governor in Council for British New Guinea, acting under instructions, and within the prescribed limits of the Constitution. The ordinances of the Local Council should be subject to the assent of the Government of Queensland, as they certainly would be subject to the assent of Her Majesty; and, if it was thought necessary, they might also be submitted for the approval of the Federal Council. Ample security might thus be obtained that no ordinances would become effective which would come into conflict with the community of Australian interests. With these guarantees the Parliament of Queensland would willingly, I believe, sanction the expenditure proposed in order to secure a well-ordered Government in British New Guinea. The security would be ample, and would rank as a simple business transaction. I have thus indicated in brief outline what it seems to me may be done. I recapitulate the points:— . (1.) Queensland, on behalf of the Australasian Colonies, to supply a guarantee for expenditure by an annual appropriation, under Act of Parliament, of £20,000. (2.) This appropriation to extend over five years; the capital amount of indebtedness thus created to be secured as a first charge against the territorial revenue of the new State. (3.) The Constitution, as embodied in the proclamation of Her Majesty's sovereignty, to contain such a reservation of native rights, and such a recitation of fundamental articles, as may be agreed upon by Her Majesty's Government acting with the Government of Queensland on behalf of the Australasian States. (4.) Queensland to be consulted in the framing of estimates as scheduled, and to undertake the audit of the expenditure.

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