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No. 10. Lieut.-Colonel Gudgeon to His_ Excellency the Governor. My Loed, — Earotonga, 2nd July, 1900. I have the honour to forward, for your information, a letter from Messrs. Grice, Sumner, and Co., of Melbourne. The same is marked " Confidential," but I think you will agree with me that there is no reason why you should not see it, inasmuch that it sets forth their position very clearly and fairly. The firm in question have been of very great benefit to these islands by taking away the surplus population of young men who would otherwise have fallen into lazy and disreputable habits, and all their transactions have been characterized by good faith and honesty. Under these circumstances, I am now in a position to ask your Lordship to make an exception in favour of the firm of Grice, Sumner, and Co., by issuing to them a permit to carry labour-men to Maiden Island, provided that in each case the vessel first comes to Earotonga. I have, &c, His Excellency the Earl of Eanfurly, K.C.M.G., W. E. Gudgeon, Governor of New Zealand. British Eesident.

Enclosure. (Confidential.) Dear Sic, — Melbourne, 9th April, 1900. Captain Barber has handed to us your letter addressed to him last November, informing him that the Federal Government of the Cook Group Islands will offer no opposition to our obtaining labour from any of above islands. We are very much obliged to you for this concession. Doubtless you are aware that Lord Eanfurly has, through our New Zealand agents, advised us not to apply for any more licenses in New Zealand. This decision places us in a most difficult position, as the following case will demonstrate. The " Jerfalcon " arrived at Lyttelton from Maiden Island on the 15th February, and, as a labour license was required to obtain labourers to replace sixty-two Aitutaki men due to leave Maiden Island on the 11th March, we were compelled to order the vessel to Melbourne after discharging her cargo, so as to obtain the necessary license to engage men, and return the Aitutaki gang. The " Jerfalcon " will by this detour lose at least three months before reaching Aitutaki. The sixty-two Aitutaki men will thus be detained some four months beyond the term of their agreement, and possibly we shall have trouble with them owing to our compulsory breach of faith. Our object in writing you is to ask whether Lord Eanfurly has been officially advised as to the decision of your Federal Government approving of men being taken from islands in the Cook Group; and, if not so advised, would your Government be disposed to intercede with the Governor with a view to the granting of labour licenses. Such a privilege would enable us to keep faith with the islanders, and so avoid all friction with them. We shall be very pleased to hear your views on this business, and thanking you in anticipation, We remain, &c, W. E. Gudgeon, British Eesident, Earotonga. Grice, Sumnee, and Co.

No. 11. His Excellency the Goveenor to Lieut.-Colonel Gudgeon. Sir, — Government House, Wellington, 12th July, 1900. I have the honour to inform you that the question of the future of this group and other islands is now laid before the Secretary of State. If they are to be annexed, the question of finance generally will be made very much easier. At the present time, however, as you are situated, it appears to me useless to go into this question further, pending Her Majesty's decision. Immediately I receive this I will inform you, and will then go into the financial question, as also the question of an appeal from the High Court. Should the boundaries of New Zealand be extended and take in any of this group of islands, everything would be made comparatively easy to settle. I have, &c, Lieut.-Colonel Gudgeon, British Eesident, Barotonga. Banfuely.

No. 12. His Excellency the Goveenor to Lieut.-Colonel Gudgeon. * Sir, — Government House, Wellington, 12th July, 1900. I have the honour to inform you that I am getting details regarding the growth of arrowroot, and also of fibre plants suited to the Cook Islands climate, and I shall hope to be able to forward you the details either by this mail or the following.