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Translation op a Letter prom Dβ. G. Craig to F. M. Moss, Esq., British Resident, and pobwarded to Makea Ariki, Chief op the Cook Islands Government. Sib,— Rarotonga, 24th August, 1897. I have been informed of the letter (liiatua) of yours to the Arikis, which has been printed and sent to them. The letter says, " Send quickly for Dr. Craig, and ask him who gave him the information regarding the liquor traffic of Rarotonga." You are quite aware that a meeting of the Arikis has taken place, and at that meeeing all I had to say concerning the liquor traffic of Rarotonga was read over (made known) to them, and that the Arikis understood it, and knew that it was correct, and that the Government of New Zealand would be informed by you of my statement. In your (despatches) letters to them you say that it is their own fault. lam telling you this, because it was me who first brought up this liquor question. I have to inform you that you are in fault, because permits for the purchase of liquor have been sold for a long time, and that you were aware of this, but you said nothing about this. You allowed this to go on, and took no steps to prevent the sale of permits. I can prove all that I have stated. I am, &c, F. J. Moss, Esq., British Resident. Geobge Craig, M.8., CM.

From His Excellency the Govebnob to Bbitish Resident, in reply to No. 13/97 (attached hereto). (No. 196/97.) Sir, — Wellington, 15th September, 1897. I have the honour to acknowledge the receipt of your despatch No. 13/97, with two enclosures, dated 21st August, 1897, which I have laid before my Ministers. They are quite satisfied with your explanation. I have, &c, F. J. Moss, Esq., British Resident, Rarotonga. Ranfubly.

(No. 13/97.) His Excellency the Goveenob from Bbitish Resident. Sib,— 21st August, 1897. At the request of Dr. George Craig, I have the honour to enclose to your Excellency the copy of a letter sent by him to me on the 18th instant (with the said copy in his writing for the purpose of transmission) and in which Dr. Craig makes certain statements as to "the disgracefully drunken habits of the natives," the "sale of liquor permits by the Arikis (the chiefs) to all comers," the "open and illicit sale of liquor to natives and Europeans at so much money per driuk," and " the poison so constantly sold to the unsophisticated native as rum." These statements are more or less founded on fact, as your Excellency will have already learned from my despatch of the 25th July (No. 8/97). As put by Dr. Craig, I have no hesitation in describing them as gross exaggerations. My attention was first drawn to an evident relaxation of the law by passing several tipsy natives returning from the " May " Mission meeting at Arorangi, which was held this year on the Queen's Birthday. lat once wrote to the Ariki of Arorangi expressing a hope that the men would be fined and be refused further permits for liquor till they had proved themselves fit to have them. Since then, feasts of various kinds have been frequent and upsetting, especially those connected with a visit of the young representative of Tahitian royalty, who is still in Rarotonga with his suite, has been received with a round of festivity by the Maoris, and feasted them bountifully in return. The time selected by Dr. Craig for his comments must be regarded as exceptional. I have written at different times to Arikis and Judges on this subject, but can only hope to see a remedy provided when the Rarotonga Council meets. The liquor law is in its hands, and not in the hands of the Federal Parliament. The issue of permits for natives by the Arikis is the weak point in the law. They depute some one to sign for them, and the agent is almost as a matter of course the Judge of the Arikis' Court, hereditary officer of high rank, and by old custom the Arikis' mouthpiece. These agents have been in the habit of paying themselves by charging for the permit. Great care will have to be taken in effecting a change or we shall only reproduce the bribery and corruption which prevailed prior to the initiation of the present form of government in 1891, and in face of which the open charging of a recognised and fixed fee, however reprehensible in itself, is a clear advance. It is not yet four years since .Judges and police—the latter an extremely numerous body, and, with the Judges, composed exclusively of the Mission Church members—depended entirely for their pay on the fines they could extort by unceasing espionage, night and day, in the attempt to make the people moral and pure by compulsion of law. Years will be required to wipe away the effects of this pernicious system, to which my early despatches drew special notice, and a gradual improvement is all that the most sanguine could hope. These circumstances have to be borne in mind, and it is charitable to conclude that Dr. Craig, who has only been here four or five months, is ignorant of their full effect. The peculiarity of his present complaint is that I find the Arikis and Judges have been led to believe that it is against the British Resident and the Licensing Officer, and is a matter with which they have no concern. I enclose a circular, for your Excellency's information, which I have been obliged to address to them on this point. In further explanation of Dr. Craig's action, I have to state that on his arrival here (29th March) the Hospital Board arranged with him to take the hospital revenue, and practically to fa,rm the institution, providing for the nursing, feeding, and attention to the patients at his own cost. This led to violation of the law, and brought the Government (and through it the British Resident) and the Board into collision, as reported in my despatch of the 22nd July (No. 7/97). Under this arrangement, the Hospital Board has abolished the hour of free treatment to all comers previously required by law, and the hospital has become so unpopular that it has dwindled to a single patient, while the term "out-patients," used in the hospital reports, means only those who are attended in Dr. Craig's private practice in the usual way. Why Dr. Craig should have made this matter personal between himself and the British Resident I cannot say, but that he has done so is a matter of notoriety here. I have always regarded him as skilful in his profession, and welcomed him warmly as a very desirable addition to our small society. He has, however, constituted himself the most active member of the small band whom the British Resident has at various times been compelled to cross, and who devote themselves to poisoning the minds of the Maoris and obstructing the Government of the islands. In proof I need only mention that the mischievously-worded petition against the Federal Court Bill was presented to the Cook Islands Parliament in Dr. Craig's handwriting, and had been for some days quietly—almost secretly—taken round by a person employed by him to obtain the few signatures attached to it when presented. I have, &c, Fbederick J. Moss, British Resident. His Excellency the Administrator of the Government, &0., New Zealand.

Enclosure No. 1. Complaint op Dβ. Cbaig as to Liquoe sold to Natives. Sib,— Rarotonga, 16th August, 1897. In my report on the diseases due to alcohol among the natives of Karotonga there occurs the statement that there are special facilities and encouragement given in this community for the liquor traffic among natives. In explanation, I desire to state that the encouragement lies in the fact that the chiefs have a direct interest in the sale of liquor to natives, inasmuch as they (the chiefs) sell permits to all comers. The facilities are that certain individuals openly and illicitly sell liquor to natives and Europeans, charging so much money per drink.