S.—2s

2

the northward, as well aa the extensive unknown land to the southward, in which it is expected the continuation of the leads rich in gold found in the neighbourhood of the Wakatipu and the Arrow will be traced. Already auriferous quartz has been found, as also good indications of other minerals in the immediate vicinity of the settlement, and on the sea-beaches gold has for years been found in small quantities. Thirdly, consequent on the formation of the settlement, large areas of country have been taken up under pastoral leases, from which a considerable rental is being received; and in connection with these upwards of 5,720 acres of land have been applied for to purchase, and in some cases already the purchases have been completed at £1 per acre. That these purchases will be considerably extended ■when communication is completed overland to Hokitika there can be but little doubt; and, as it only requires some sixteen miles of track to enable this to be done, a large revenue is likely soon to be derived from this source. Fourthly, communication has now been completed between Otago and the southern portion of Canterbury with the West Coast, by the formation of a horse-track over the lowest known pass —the Haast Pass —at the highest point, only 1,716 feet above the sea level. Fifthly, the development of the intermediate settlements on the coast, and the opening up of the valuable lithographic-stone quarries at Abbey Eocks, has been greatly facilitated by the increased opportunities for communication caused by the formation of the settlement. Looking at the matter from a purely financial point of view, let us see what the results have been, although I regard this as but of secondary importance at this early stage of the settlement, the primary object being the opening up of new country available for carrying a large population, and thereby not only increasing the revenue directly by Customs duties, but also improving the rateable property of the colony. £ s. d. Take the actual expenditure up to 21st May, 1877, as ... ... 17,532 0 0 On the credit side we find, — £ s. d. 1. Land taken up by settlers, as per Return C, 4,724 acres ... 5,473 0 0 2. Land sold in Town of Arawata ... ... ... 1,155 0 0 3. Kent of pastoral runs let in consequence of and since the formation of the settlement, bringing in annual rental of £244, 10 years'purchase ... ... ... 2,440 0 0 4. Land purchased outside of settlement, 720 acres ... 720 0 0 5. Land applied for, but purchase not yet completed, 5,000 acres ... ... ... ... ... 5,000 0 0 6. Completed survey of 15,509 acres, available for settlement 2,846 0 0 7. The value of work done by settlers on roads within the settlement, which may be fairly added to the above sums ... ... ... ... ... ... 10,312 0 0 27,946 0 0 In addition to this, there has been a small sum received from gold fields revenue, and a topographical survey made of the entire block of 60,000 acres. It must further be borne in mind that there is still within the settlement an unsold area of 55,276 acres, which the Government hold as security for the repayment of any advances made, so that, independently of all other direct and indirect return, there is still ample security for advances to nearly treble the amount appropriated. Having now dealt with the subject at a greater length than I would have done had the settlement not been in a remote situation, where the Government have not the same opportunity of judging for themselves of the results, I come to the serious question of the future of the settlement, and on this subject the report of the Resident Agent is very clear and explicit. From the Return E, appended to this, you will see that a sum of £5,574 10s. is still required to carry out the original conditions of employment under which the settlement was formed, and this expenditure I would recommend should be made upon the following works, pointed out as necessary by the Resident Agent, in order to complete the access to the different blocks settled, and to afford a ready means of landing stores and shipping timber and other produce from the settlement: — £ s. d. Bay Road, 200 chains at £13 ... .., ... ... 2,600 0 0 Metalling Arawata Road, 330 chains at £2 ... ... ... 660 0 0 Completion of metalling McLean's Road, Waiototo ... ... 310 10 0 Metalling Turnbull Road, 180 chains at 255. ... ... ... 225 0 0 Cost of jetty at Jackson's Bay ... ... ... ... 1,260 0 0 £5,055 10 0 When this is done, the settlers will then be in a fair way to utilize such resources as they may be able to develop from the materials at their command. One of the principal of these is the timber trade, and it is much to be regretted that, owing to the great falling off in this branch of industry of late in the colony, capitalists have not seen their way to establish mills independently of Government assistance, as we had.every reason to expect they would have done when the settlement was originally established. Seeing that this has not been done, I feel that the suggestion of the Resident Agent as to the establishment of co-operative saw-mills is a practical way out of the difficulty, and, as the settlers there have not sufficient capital of their own to go to the first expense of procuring the necessary plant for themselves, I would ask your authority to procure the required plant for at least one of the proposed mills. The settlers would then find the labour, and a permanent industry be established, which, although at the present moment may not pay them anything like full wages, would enable them, with the homesteads they have now acquired, to maintain themselves and their families in their new home. The establishment also of co-operative stores would at the same time relieve the