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for small settlers. What was proposed was that the Government should give Mr. Shennan pastoral country in exchange for agricultural land that would be suitable for small settlers. By taking a portion of the Conical Hills I believed I could secure good country for settlement. Mr. Percy Smith told me that Mr. Shennan would sell it, but on looking over the funds at our disposal we found we had not sufficient funds by £10,000 —that is, we were £10,000 short of the amount required to effect a purchase. Then, again, there was at that time no direct offer to us, other than that he was prepared to sell. He named no price. 35. And you required that amount ?—Yes, we required to have the money before we could negotiate. There was another question that influenced our decision at the time. It was this: that it would not be right, in the interest of the public, to spend the whole of our money in one district. It would take nearly the whole of a year's money to purchase this Conical Hills property. Owing to the demand for land for settlement in other parts of the colony, and that the money voted for that purpose should be distributed as widely throughout the colony as possible, we chose the Pomahaka property, because we could purchase for less money, and that we would in time have other money for the purchase of other lands. 36. I have here the report to the Governor from the Board. It is dated the 14th of September, and is marked, " Beceived by the Governor 3rd October." Why should it have been a fortnight in going to the Governor ?—A paper might be lying in the department for two or three days before it would go to the Governor. There might be various causes for that. It might be lying at the Governor's some time. The Governor might keep a paper a few days before returning it. 37. It was not before the Governor, as he tells us, until the 3rd October?—l suppose that is so. I have no doubt that is correct. 38. So that it lay somewhere for more than a fortnight?—Yes, I suppose that is so. 39. Mr. Percy Smith has told us that he wrote a letter to Mr. Shennan saying there was no power to exchange the Conical Hills, and that nothing could be done until he made a formal offer. Was that letter sent under your instructions ? —lt is very likely—l do not remember. It is very likely that, after we had discussed the matter, I would instruct him to write to that effect. I might say this, in connection with Conical Hills: that I had hoped, if this Bill passed the House, we'would be able to get the Conical Hills by exchange. I did not want to put the chance of an exchange for the Conical Hills off altogether. I hoped to get the Bill through the House, and then ■ effect an exchange with Mr. Shennan. In that case we would not require any money; it would be land for land. I thought it would be a good thing to get agricultural land for pastoral land which never could be anything else than pastoral land. 40. The Bill was killed on the 28th of September, the day that Mr. Percy Smith writes to Mr. Shennan: that being so, can you tell us why it was suggested to Mr. Shennan that a formal offer of sale should be made if you had no funds available for the purchase ? [Letter read.] " 28th September, 1893. "Sir,— "' Land for Settlements Act, 1892,' and Conical Hills Estate. " I have the honour, by direction of the Hon. Minister of Lands, to inform you, in reply to your letter of the 20th July last, and also that of the 18th instant, offering your estate at the Conical Hills to the Government under the Land for Settlements Act, that he regrets there is no power at present which would enable him to effect an exchange of Crown pastoral lands for your property. Your letter of the 18th instant, while expressing your desire to adopt the alternative of selling the estate out and out if the Minister should consider it advisable to treat with you upon that basis, does not mention the terms on which you are prepared to sell. It has been anticipated that the value which has been put on the property by the Board of Land Purchase Commissioners is such that you would not be inclined to accept it, and, consequently, nothing will probably come of the negotiations; but until you have made a definite offer the Minister is debarred from considering the case. " I have, &c. " S. Percy Smith. "Watson Shennan, Esq., Conical Hills, Pomahaka, Otago." —I might do so with the view of holding it over for another year. Mr. Percy Smith, no doubt, had some reason for saying it. 41. Is that the full account of all you had to do with the purchase of this land of Pomahaka ? —All that I recollect. If there is anything else you desire to know I will tell you if I can. 42. At the election, do you remember Mr. Scobie Mackenzie's speech at Palmerston?—Yes. 43. And his remarks about the Pomahaka purchase ?—Yes. 44. What did you infer from those remarks? —I inferred that it was a charge of corruption against myself by way of insinuation. 45. Do you know that that conclusion was arrived at by others from those remarks as well as yourself?—There is no doubt about it. 46. Why?—Because people told me so. Mr. Scobie Mackenzie's friends stated so distinctly. 47. As it was a charge of corruption, did you treat it as such ? —Yes. 48. Did you in your speech treat it as a charge against yourself ?—Yes. 49. Had you any communication with Mr. Douglas after the delivery of Mr. Scobie Mackenzie's speech?—l think I asked my secretary to communicate with him> and ask what all this meant. I do not remember what my secretary wrote. 50. Did you hear from Mr. Douglas in reply ?—Yes ; he sent me a letter. 51. We have it in evidence. Did you read the newspapers at the time ?—The Otago Daily Times, the Star, and Witness said it was a job, and that I was a party to the job. 52. You have no doubt about that?—Not the slightest. 53. Did you in anyway receive remuneration or any advantage to yourself from this purchase? —None whatever.