A.—3

67

No. 169. Cook and other Islands Report fob Year ending 31st .March, 190-1. Sir, — Rarotonga, Cook Islands, 11th April, 1904. I have the honour to forward herewith my report for the year ending the 31st March, 1904, together with returns of revenue and expenditure and Irade for year; also estimates of revenue and expenditure for the ensuing year. I have, &c, W. E. Gudgeon, Resident Commissioner. The Hon. C. H. Mills, Minister for the Islands, Wellington.

Enclosures. TRADE RETURNS. The returns of exports and imports, marked A and B and attached hereto, show that the exports for the 3'ear were about normal, and only slightly less than those of 1903, the values being .£34,821 and £34,740. In the matter of imports it will be seen that there is a decided improvement, the value having increased from £27,623 to £34,821. Under ordinary circumstances the exports might have been expected to increase, but it must not be forgotten that the year ] 903 was one most favourable to the trade of these Islands, our chief commodities, oopra and pearl-shell, commanding the highest prices; whereas during the present year copra has fallen 25 per cent, in value and pearl-shell from 50 per cent, to 70 per cent. Bad as this position was naturally, it has been accentuated by the childish behaviour of the Natives of Aitutaki and, in a less degree, of those of other islands. There, people resent the fall in prices and attribute the same to the machinations of the traders, and therefore during the dry winter months they refused to make copra. When, too late, they found that they would after all be the chief sufferers, they did, in a half-hearted way, make about half of the usual amount of copra, but for the most part of indifferent quality, owing to the humid atmosphere of the summer months and the sprouting nuts. The real fact is that the Natives of these Islands are, with a few exceptions, mere overgrown babies, who sulk if they cannot get things their own way; and it would be well that they should be punished like babies. We cannot have lost less than £3,000 by the childish behaviour of these people, and I submit that the officer administrating the Islands should have the power in such cases of making good the revenue lost by imposing a poll-tax on the offenders of not exceeding £1 per head. REVENUE AND EXPENDITURE. Schedule C attached hereto shows the receipts and expenditure for the past financial year to have been £5,310 4s. 3d. and £4,558 3s. 9d. respectively, yielding an unexpended balance of £752 os. 6d. to be added to the surplus of the Ist April, 1903, which was shown in my last report to be £1,858 16s. sd. We have therefore an actual cash surplus of £2,610 16s. lid., to which must be added the outstanding survey charges and Land Titles Court fees, which are now in the position of liens on the various blocks of land dealt with, and amount in the aggregate to £421 18s. 6d. Our true surplus is therefore £3,032 15s. sd. I would point out that this favourable financial position has been attained in the face of an expensive schooner, which has been run in aid of the public and of the Government of the Islands, notwithstanding virulent opposition and misrepresentation, and in spite also of a large but necessary public-works expenditure of over £3,000 in the last two years. The necessity for the expenditure will be apparent when I say that when I arrived here in 1898 the Government did not even own a dog-kennel. In the erection of the public buildings of this island due attention has been paid to the fact that the climate of Rarotonga is destructive to all timber, hence the foundations and walls have in every instance been made of concrete, and in the case of the Public Offices the floors have been laid of the same material, with the result that the danger from fire has been minimised, and the upkeep of the buildings will never be a source of trouble or expense. In the estimate of expenditure and revenue for the current year (D and E) attached, some small but necessary increases have been made, but the estimated expenditure is £200 below the actual sum expended during 1903-4. Among other items, I have provided for the immediate erection of bridges over the four unbridged creeks of the island. Heretofore these streams have been avoided by the road turning seaward over the heavy sand of the lagoon-beach, to the great, loss of those who carry fruit for the New Zealand market, since the loads must necessarily be reduced one-half in order to face the sand. As it is advisable that every facility should be afforded to those who carry fruit, I have thought it advisable to build all of these bridges at once on the usual island system, by which we find the timber and give a subsidy in aid to the people of the district, who find the labour and construct the bridges on the designs of Mr. Connal, Island Engineer. Foremost among those works which must shortly be undertaken is the drainage of the Maraerenga Lagoon, behind the Village of Avarua. The land affected by this work is of the best quality, but is at present worthless, by reason of the fact that from December to March it is flooded from 2 ft. to 6 ft. deep by drainage from the mountains, an evil that may, however, be cured by a concrete or pipe drain through the high land to the outer lagoon. I estimate the cost of this work at £100, but in any case the drain must be made, since the four cases of typhoid fever that occurred last year may be attributed to the stagnant water of the lagoon. The lands benefited