B.—No. sa.

Sir G. Grey to Mr. Oaidwall— No. l.Jim. 1,186G »«» 8 „ „ 9 „ 12 „ »•! >. 13 „ ~42, May 12 „ „43 ~ 12 „ ~ ** „ 14 „ »45 „ 14 „ Mr. Cardwall to Sir G. Grey— No. 32, Mar. 26, 1866. No. 52, April 26, 1866.

THE COLONIAL COMMISSIONER'S REPORT. Wellington, 1st July, 1867. To His Excellency Sir George Grey, Knight Commander of the Most Honorable Order of the Bath, Governor and Commander-in-Chief of the Colony of New Zealand, and Vice-Admiral of the same. May it please Your Excellency,— On the 29th day of September, 18GG, I had the honor to receive from your Excellency an appointment as Commissioner on behalf of the Colony, to examine in concert with Commissary-General Jones, certain accounts, including claims and counter claims (exclusive of capitation charge), more particularly referred to in certain Despatches, .specified in the margin, between the Imperial Government and the Government of the aforesaid Colony, and into such other accounts as might be considered to arise between these Governments out of the Native disturbances in the Colony during the years 18G0, 1, 2, 3, 4, 5, and 6, and to report to your Excellency the results of such examination, with a view to ascertaining the precise liabilities incurred by the Colony. 2. As the direction and extent of the inquiry are mainly developed in these Despatches, it will not be considered inexpedient that I should concisely recapitulate the chief points embodied in them. 3. They present a statement of the amounts advanced from the Colonial Treasury on account of Imperial troops aud services to the close of 18G5, and declare that at no time did your Excellency or your Responsible Advisers deem the great expenditure to which the Home Government and the Colony were put either necessary or desirable-; that the war would have come speedily to an end if operations had been more energetically and successfully carried on; that the whole control of the Military Expenditure, either Imperial or Colonial, was virtually taken out of •your Excellency's hands by the refusal of the General Commanding the Forces to furnish copies of Military Despatches relating to Military subjects, and also by keeping back from your Excellency the Estimates of Military Expenditure. They further exhibit the heavy outlay and sacrifices which were made by the Colony in the suppression of the rebellion, and by which a large saving was effected to Great Britain. They furnish important arguments, as adduced by the Colonial Secretary, Mr. iStalford, why the proposed increased rate of contribution by the Colony, in aid of the expenses of the Imperial troops, ought not to be made on any grounds of good faith and equity. Reference is made in them to the fact that certain debentures, to the amount of £500,000, had been delivered to the Imperial Government with a view to the adjustment of the debt due by the Colony ; and they point out the desirability of covering these debentures by an Imperial guarantee, whereby a profit of about .£20,000 might probably be realized. They convey 'also instructions to Mr. Jones relating to interest being charged, at the rate of 4 per cent, per annum, on the Imperial claim, and to crediting the Colony with the interest of the .1500,000 debentures which had accrued from the 1st November, 18G5; and, finally, they convey instructions for the appointment of a Commission to go minutely into the claims and counter-claims. 4. It will not be necessary that I should repeat to your Excellency the mode hi which the examination entrusted to me has been conducted, nor how it has been interrupted ; for the correspondence with Mr. Jones, which I forwarded to you in my reports of the Gth of April and the 2nd of May, will have put you in possession of all the material facts of the case. I will only here express my conviction that, had the system been continued for a few weeks longer, the whole of the claims and counter-claims would have undergone a searching and final examination, and the Commissioners would have been enabled to have presented their report by this time. When the large amount to which the claim of Her Majesty's Treasury has increased is considered, being now no less than £1,304,963 17s. Id., it will doubtless appear to have been imperative on me to insist that the most minute and careful examination of the several items composing it should be instituted. 5. On the 9th of October last I placed an account, which I had received from Mr. Jones on the Gth of the same month, in the hands of Mr. Smith, an accountant, whose services I had secured, for thorough examination. I herewith append his report, dated the 8th of January (Appendix B). it will appear that the Debit side of the account amounted on the 31st of March, 18GG, to £858,380'2s. 9d., exclusive of capitation charge for 18G5-6, and also exclusive of any charge for interest. Intimation was however given that there was still an outstanding claim for arms and other military stores amounting to £79,75G 19s. 10d., and probably the sum of .£45,000 for an Admiralty claim. The sums on the Credit side of the account amounted, on the same date, to £16,24.S 8s. 7d., inclusive of £8,333 (is. 8d., being five months' interest on the Colonial payment of £500,000 in 4 per cent, debentures.

PAPERS RELATIVE TO THE IMPERIAL CLAIMS AGAINST THE COLONY.