B.—No. 4

Having regard to the fact that this statement is approximate only, being partly based on estimate and partly consisting of large items which cannot be investigated without reference to the Colony, I beg to submit the following remarks, founded on a comparison with other statements furnished to the Colonial Government. The last statement of the Deputy Commissary General in Auckland, dated 14th November, 1862, based upon a statement of Her Majesty's Treasury, contained in a minute from their Lordships of 24th May, 1862, showing the amount chargeable to 29th October, 1861, and brought down by the Deputy Commissary General himself to 30th September, 1862, exhibits, when adjusted so as to comprise items of the same nature with the War Office statement, a total of .£195,233 17s. 5d. I have the honor to enclose an abstract of the statement in this shape. Another statement, compiled by the Government of New Zealand from accounts furnished from time to time, shews, when dealt with in the same manner, a total of £203,849 19s. lid., of which I enclose the particulars. I have to express great regret that the information obtainable in this country does not permit the apparent discrepancies of these three statements to be reconciled; and that, therefore, the exact amount of the Imperial claim against the Colony cannot be fixed without a delay which may extend to many months. But the Colonial Government are unwilling to postpone the discharge of whatever may be due by the Colony, if delay can be avoided ; and, therefore, I will pass at once to the consideration of the nature of the Colony's liability, for the different items of which the account is composed. The charge on account of local forces rests upon an undertaking by the Colonial Government, given about the time of the outbreak of War, to repay advances made from the Treasury Chest for the pay, allowances, and rations of Militia and Volunteers called out for active service. The gratuity to Ships of War was advanced out of the Commissariat Chest at Auckland, to the order of the Colonial Government and at their express request. The capitation charge for troops rests upon an undertaking of the Colonial Government, given in 1858, to pay £5 per year for every officer and man of Her Majesty's Troops in the Colony. The charge for Field Defences, for Road-making, and for Arms and Ammunition (except a few items), together with that for Transport, if raised, rests upon no promise or guarantee of the Colonial Government, but, it is presumable, on the Imperial view of what is a fair Colonial liability. The charge for Barracks, including repairs and extensions, was, I understand, commuted in 1858, in the undertaking to pay £5 a head for Her Majesty's Troops. I have to observe that if the question of what is a fair Colonial liability be left open for consideration, the Colony may justly claim that the whole account shall be considered on the same principle, and in that case that the guarantee of the Colonial Government, given under severe pressure, without full kuowledge, and accompanied by a protest, shall not be made to cover items in themselves not fairly chargeable. But if the guarantee, formally given by the Colony, be insisted upon in all cases as a proof of debt, the Colony will be justified in demanding that its liability shall be strictly limited to the items comprised within the terms of its undertaking. The Colonial Government on their part desire to discharge the whole amount for which it can be shown that the Colony has made itself responsible, without urging any claims for reduction, however well grounded. And I venture to assume that Her Majesty's Government will take the same view, inasmuch as the great bulk of their claim will thereby remain undisturbed, and the process of settlement be rendered most easy and rapid. Assuming the total amount claimed by the Imperial Government at £200,000, than which sum it cannot be greatly more or less, it will be necessary, in the view now submitted of the Colonial liability, to reject the following items :— Field Defences, a sum of about ... ... ... ... £2,100 Arms and Ammunition, about ... ... ... ... 5,700 Barracks, about ... ... ... ... ... ... 6,000 Road-making, about ... ... ... ... ... ... 31,400 The Colony also claims to have paid, in addition to £1,388 2s. 7d. admitted by the War Office, a sum of £850 14s. in cash, upon sundry accounts. In further reduction of the total liability, the Colony claims to have spent certain sums on the maintenance and repairs of Barracks and Military Buildings, the cost of which by agreement falls upon the Imperial Government, as against the Colonial contribution to the Troops. No complete Colonial statement of these disbursements is in my possession ; but I am informed that an estimate of the value of the work done, amounting to some thousands of pounds, can be furnished by the War Office if required. It appears from the above considerations that the actual liability admitted by the Government of New Zealand, so far as can be ascertained from the approximate statements rendered in this Country and in the Colony, is not greatly more or less than £150,000. I have, accordingly, the honor to propose that the sum of £150,000 be taken as the amount of the debt of New Zealand to the Imperial Government, on account of Military operations, to the 30th September, 1862, to be dischai-ged in accordance with the provisions of the New Zealand Loan Act, 1862. I have, <fec, Crosbie Ward, The Under-Secretary of State, Colonial Office.

6

PAPERS RELATING TO