D.—No. 5.

of their desire cordially to co-operate with the Governor in this just and temperate policy towards the native race. It only remains that, at Mr. Cardwcll's direction, 1 should state the views of Her Majesty's •Government with respect to the future relations between the Mother Country and the Colony in respect of military expenditure. Hitherto the contribution of the Colony has been merely nominal, being £5 per man, which recently has not been paid into the Imperial Exchequer, but almost entirely ■employed tor native purposes in New Zealand. Her Majesty's Government feel themselves imperatively called upon to provide that if under the New Zealand Government, to whom in ordinary times the management of native affairs now almost exclusively belongs, the Colony shall again be involved in a civil war, the whole expense of the troops engaged in that war shall not fall upon the Mother Country. They Acknowledge that New Zealand differs from the Australian Colonies in this respect, viz.: that the presence of a large native population renders necessary the presence of some military force even in times of peace. This force they propose to fix at one regiment; and for that one regiment they do not propose to charge the Colony of New Zealand with the amount which it is proposed to charge upon the Australian Colonies. They will expect that in consideration of this one regiment being maintained at the charge of the Imperial Treasury, the Colony will continue to devote the sum of £50,000 per annum to native purposes of the nature indicated in Sir G. Grey's despatch of the 6th December, 1861, including the government of native districts and the moral and material advancement of the native race, but excluding the maintenance of any military or semi-military force for the suppression of •disturbance. For every soldier over and above this one regiment Her Majesty's Government will •expect the Colony to pay in future the same amount which has been proposed to the Australian Colonies, viz.: the sum of £40 for every infantry soldier, and £55 for every artilleryman. These measures they regard as just measures of security against the risk of war being incurred by Colonial policy, while the principal expenses would fall to be discharged, not by the Colonial, but by the Imperial Treasmy. This arrangement should commence at the termination of the present arrangement, viz.: at the close -of the present year ; but as it is not possible that the large army now in New Zealand can be altogether removed from the Island before the Ist January, 1865, they will so far delay the period of its application as to agree that in the year 1865 it shall not be applicable to any force beyond four thousand, men, in addition to the one regiment which is to be maintained at the exclusive cost of the Home Government. Arrangements of this kind must of course be subject to revision hereafter, especially in a Colony like New Zealand where a few years may bring with them a very altered state of circumstances. The whole arrangement, therefore, may be thus summed up : 1. That the original guarantee be extended from half a million to one million, of which probably ra-ther less than half will be paid into the Imperial Treasury, and the remainder will be applicable to the purposes of the Colony. 2. That after allowing for one regiment, New Zealand shall pay to the Imperial Treasury the same ■contribution as that which it is proposed that the Australian Colonies shall pay. 3. That inasmuch as the Mother Country furnishes one regiment, in consideration of the many circumstances connected with the presence in New Zealand of a large native population, the sum now paid out of Colonial funds for the especial benefit of that population, viz., £50,000, shall continue undiminished. 4. That New Zealand shall not pay upon more than four thousand men in the year 1865. I am, &c, Reader Wood, Esq. F. Eooeks. No. 25. Snt, — Downing Street, 12th June, 1864. I have the honor to acknowledge the receipt of your Despatch, No 36, of the 29th of February, forwarding, with an explanatory Memorandum on the subject, a Return, shewing the number and composition of the Colonial Forces on the 31st of December, 1863. I notice with much pleasure the efforts which have been made by your Government in the Northern Island, to provide for the security of the inhabitants of the Colony, and to aid in the active •operations which are now being carried on against the rebel natives. I have, &c, Governor Sir George Grey, X.C.8., &c, Ac, &c. Edward Cardwkll. No. 26. Sir,— Downing Street, 18th June, 1864. I have the honor to acknowledge the receipt of your Despatch, No. 43, of the 14th of March, transmitting Reports from Mr. Barstow and Mr. E. M. Williams, Resident Magistrates, in the Northern District of the North Island of New Zealand, respecting the improved state of feeling on the part of the Native population in their Hundreds. I have, &c, Governor Sir George Grey, X.C.8., &c., &c, &c. Edward Cardwell. No. 27. Sir, — Downing Street, 21st June, 1864. I have the honor to transmit to you the accompanying Orders of the Queen in Council, confirming the following reserved Acts of your Government: — Ifo. 9. An Act to enable Provincial Councils to make Laws affecting Public Eoads and Watercourses.

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TO HIS EXCELLENCY SIR GEORGE GREY, K.C.B.