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Enclosure No. 2. The Hon. the Peemiee to the Hon. Sir William Fox. Sib,— Premier's Office, Wellington, 19th February, 1891. Referring to my letter of the 2nd instant, I have since ascertained that the statement which accompanied yours of the 24th January, of the action of Mr. F. J. Moss, the lately appointed Eesident in the Cook Group, in the Southern Pacific, in reference to the liquor traffic, by the introduction of a licensing system in lieu of the prohibitory law hitherto existing, is a copy of one which you had forwarded to his Excellency the Governor, and to which His Excellency has desired me to reply. It is to be regretted that the New Zealand Alliance should have described Mr. Moss's action as " unduly hasty and indiscreet," because it appears to have been exactly the opposite. That gentleman was specially instructed by the Governor to inquire into the liquor traffic in the Protectorate, and on his arrival at Earotonga he urged the ruling arikis to call their Council together and pass a suitable law, absolutely prohibiting the sale or gift of imported spirits to natives. On the 22nd November, 1890, a law was passed that "No person, be he native or foreigner, shall sell spirituous liquors to any native. Any person so doing from this day will be fined $150 cash. The native who buys such liquor will also be fined $5 cash." But Mr. Moss soon found that some of the arikis and chiefs were not in favour of prohibition for themselves, and resented the application of this law to natives only. Further, finding that to make a prohibitory law applicable to both races was impracticable unless the cordial co-operation and willing obedience of the natives and the foreign residents could be secured, he advised that another Council should be held, at which the foreign residents should be represented. This Council met on the 22nd December, and, after considerable discussion at an adjourned meeting, held on the 24th, passed a law for the control and restriction of the sale of intoxicating liquors, and appointed a licensing officer to give effect to its provisions. Under this law "No intoxicating liquor shall be sold by any one except to persons to whom a permit to purchase or receive the same shall have been granted by the licensing officer. In the case of natives, the permit shall only be issued on the written authority of the ruling ariki of the district, but the foreigners shall go only to the licensing officer." I enclose copy of a note (Enclosure No. 6) addressed by Mr. Moss to the Rev. James Chalmers, who was at Rarotonga at the time and acted as interpreter at the Council, upon which that gentleman confirms the fact that control and restriction, in preference to prohibition,*was voted for by the whole Council. The law relating to total prohibition, to which in the statement the New Zealand Alliance specially refers, appears to have been a dead letter prior to Mr. Moss's arrival, as will be seen from a letter addressed by the Rev. Mr. Chalmers to the Governor on the sth instant, copy of which I also enclose (No. 5), in which he also describes the immediate good effect of the law placing the sale of intoxicating liquors under restriction. The Government has given the matter its most attentive consideration, and has arrived at the conclusion that Mr. Moss has been very earnest in his endeavour to stop the liquor traffic, and that under all the circumstances the action taken by him has been the wisest he could have adopted, and has the entire approval of the Government. I have, &c, Sir William Fox, K.C.M.G., J. Ballance. President of the New Zealand Alliance.

Enclosure No. 3. Mr. Moss's Memobandum for His Excellency the Goveenoe on Sir W. Fox's Petition. Wellington, 3rd February, 1891. The petition states that my action at Rarotonga is " calculated to inflict a great injury on the inhabitants of that and other islands of the group," and that it is " in direct contravention of the wishes of the greater part of the inhabitants, and in conflict with the fundamental principle of their Constitution." As to the injury : Nineteen houses were openly and at all hours selling liquor to be drunk on the premises. These are now closed, and no native can be supplied with liquor unless he has a written authority from the ruling ariki of his district to apply for a permit to purchase the same. In no case is any liquor sold to be drunk on the premises by either native or foreigner. As to the " fundamental principle of the Constitution," I am not aware of the existence of a Constitution of any kind. Prohibitory liquor laws have been on the law-book for many years. At some of the islands they are rigidly enforced. At Rarotonga, from causes stated in my report, they had fallen into disuse and were found impracticable. I was informed that the attempt to enforce them only led to bribery and corruption, and I believe that this would be the result now unless European officials were appointed to prevent smuggling and illicit trading. The New Zealand Alliance is in error in supposing that prohibition is desired by the people. The Council, consisting of natives and a representative of the foreigners, unanimously voted for the law now in force in preference to total prohibition. The Minutes of Council appended to my general report are on this point a sufficient reply. I observe also that the Alliance, in the letter to the High Commissioner, Sir John B. Thurston (of the 30th May last), refer to the law as being " we believe " embodied in the political constitution of Rarotonga. They add that they also believe it has been hitherto rigidly enforced. The grounds for this belief are not mentioned; nor is any reason given why the petition should now speak so positively. If the reasons were given, I think I could show the Alliance how it has been misled.

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