I.—Bb.

10

T. W. FISHER.

have alread}' been informed of the position, and they should serve the usual fencing notices on the Board, when arrangements would be made to see that the values arranged for the half-cost of fencing-line would be duly protected on the adjoining land being leased ; and if they have complied with their requirements I am satisfied the Board will see that its obligations are given effect to in fact, I know the section in question was loaded with the sum of £18 Is. (id., being the value agreed upon. With regard to the remark that he does not know what will happen at the end of the second term of twenty-one years, as to the valuation for improvements, the posit inn is clear: the block was leased on a perpetual right of renewal, except that at the end of the second term (forty-two years from date of original lease) the Native owners have the option of paying up the value of the improvements in the whole block, when it would be reconveved to them ; therefore the lessee will get the whole of bis improvements: failing the payment at that period, the right of renewal exists in perpetuity. As to sales of lessees' interests in the block, there hare been several, and some of the purchasers are men who have farmed in Wanganui district for years i ml are recognized as successful farmers: they have paid a goodwill for the lease over the actual mount that has been expended on improvements. In connection with the assessment of valuations, the lessee has the same voice in assessing the amount as the landlord, each appointing his own arbitrator, and in the event of the arbitrators not agreeing, then the umpire decides a fair rental. The right now clearly exists for noting any expenditure on improvements: they can be duly recorded for subsequent use if necessary. The Government schedule as to value of improvements does not come into the question. As to the implied statement that the right of renewal is at an increased rent, this is hardly correct, as, assuming the present rental was Is. 9d. per acre, and when it was revalued was £6 per acre (capital value) and the improvements were rained at £4 an acre, then the renewal would be on the basis of the unimproved value, and, if liable lor a (id. special rate for loans, would make the rental only Is. fid. per acre for renewal term, or .'id tier acre less than present rental. Taking Mr. Duigan's statement as to financial requirements, and his remarks as to the action of the Bank of Australasia, I can only say that on similar-tenure leases in West Coast settlement reserves the bank under notice has, to my knowledge, in a number of cases accepted these as valid securities; while, with regard to the remarks as to State-guaranteed Advances Department, I know at that period they were not dealing with advances for over £501), which was no doubt tinreason of refusal. As to the legal position he places before the Board, I can only assume that it was given on the assumption that the leases under notice were Native land and made with the Native owners, and not on the condition generally acknowledged as applying to land vested in a statutory Board carrying with it certain obligations. Referring to his remarks on the roading question, I presume he carefully studied the roading conditions notified on lithos at the time of sale, and which one would think would be considered by any person prior to submitting tenders. With regard to the milling-timber condition, the Board had under consideration the advisability of retaining all the timber lands for a period, until such time as would warrant the disposal of same; but after consideration of the question it was decided that in the interests of settlement generally the block would be more advantageously dealt with by the opening of same, and therefore it was decided the lessee should have half of any royalties, and the upset rents for leasing were only placed on the quality of the land for grazing purposes; and, as to the royalty basis for any timber if sold, it was fixed at Governmenl schedule, which applies in many cases well known to be as difficult to work as the Ohotu Block would be. In the particular case he refers to of a Native being bis neighbour; the land was not a reserved section for Maori occupation : the bolder took it up in the same manner as a European, and therefore was an ordinary lessee. Taking the statement that a man may do nothing with his land until the end of the term by way of improvements, this is against the conditions of the leases : certain improvements have to be effected, and the position shown needs no argument as to which lessee is the better situated— the one who improves bis section from the start and gets an immediate return on bis expenditure, or the one who pays annual rental for the whole term and gets no return for the money paid. Speaking generally as'to the block in quest ion, at 1908 the Native Minister was supplied with a statement of the position of this block. Liabilities and further expenditure were tabled as follows: Old survey lien, £1,341; subdivisional surveys and laying off of road lines, £6,877; expenditure on road-formation, .£8,037; further expenditure, £2.501): total, £18,755. The amount originally intended for expenditure of opening up the block was assumed at £15,000, so that the amount was increased considerably. The roading, £8,037, is now being reduced Inpayments from the rents id' .£BOO per annum. The survey account has already been liquidated, and the outstanding survey lien of £1,341 has yet to be paid : while, as to the further roading mentioned, £2,500, some expenditure has been i.idae. but the larger portion of this is still to be expended. Any stoppage as far as the sum in connection with roadwork is concerned was brought about at the instance of the lessees, who, recognizing something more than a pack-track was desirable, decided, so I understand, to take procedure for raising a loan under the Local Bodies' Loans Act, and the Board would either contribute a lump sum pro rota or pay a proportion of the halfyearly payment to the amount of their assumed indebtedness. I attach memo, of the Hon. the Native Minister to the Right Hon. the Prime Minister, showing what the intention as to expenditure was for opening up the block in question : also copy of letter I forwarded in November last to the President of the Hoard, setting out the position as 1 understood it; a copy of a memo, from the President of the Board to the Chairman of the Waimarino County Council, dated 13th March, 1911 ; and a copy of a letter in reply to President of the Board from Waimarino County Council, dated 12th April, 1911. 14th October, 1911. Thos. W. Fishbr, Under-Secretary.