A.—3b

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levied on tobacco ; but as soon as the House dealt with the question of annexation and the Cook Islands Act all the islands fell into line witli ourselves, for now that you are annexed to New Zealand you are carrying on trade under the laws and regulations of New Zealand. The question of this tobacco is one that received careful consideration, and you will find in the Cook Islands Amendment Act that we provided a clause to prohibit those who wished to export tobacco from Niue to any other part of New Zealand. It was a preventive measure, introduced, as I told Mr. Head in Auckland, to meet this difficulty —that if we lowered the duty or kept only 10 per cent, on tobacco in Niue there was nothing to prevent speculative men from running in a cargo of tobacco here, paying the 10 per cent, to the Collector of Customs, and shipping it off to the other islands or New Zealand, and thus making a lot of money. It was impossible, therefore, to regulate matters for Niue, at any rate, until this clause had been passed in the Act of last year. Now, the Cabinet have power by Order in Council to make some alteration if they deem it wise. There is one point in connection with this question of duty that you must not overlook—that is, that while you pay 3s. 6d. per pound on tobacco you are getting other things from New Zealand at much lower rates than it you were paying the 10 per cent, duty all round As to the twist tobacco, I can hardly agree that it is fit only for sheep-wash. While our young people in the colony may prefer '■ Juno," &c, I think this sample is a very fair tobacco. The question is whether we can impose a tariff on tobacco on a graduated scale. If we can do that, and it can be shown that there is a good deal of difference in the cost of the different brands, we might meet Niue in some way. The matter will be submitted to Cabinet, together with your views, on my return. I would like you to explain to the Natives, however, that they are benefiting in respect of many other things. For h'stance, the old duty of 25 per cent, on hats and the 10 per cent, import duty on New Zealand produce has been swept away. We do not want to impose anything excessive in the way of duty ; we only want to improve matters between these islands and New Zealand if we can. I should think that an island with the acreage of Niue must be capable of much further advancement, and with more regular communication with New Zealand industries would probably open up here that you cannot deal with at the present time. You also want more roads, and better roads; but you must not overlook the indirect benefits which you are to receive from annexation with New Zealand. You need more regular communication, and, if possible, opportunities to export produce outside New Zealand. Then,-the Commonwealth sends over an immense quantity of tropical fruit, though I cannot say how far this affects Niue. In any case the matters I have referred to should have your attention. When Cabinet has decided the tobacco question I will send you word as soon as. possible. In the meantime there can be no alteration. Mr. Bex: We understood that the 10 per cent, duty would remain indefinitely, but we are informed by the Resident Agent that we must pay the New Zealand duty. Hon. Mr. Mills : There was some misunderstanding between Mr. Head, jun., and myself when I saw him in Auckland a short time ago, or the matter would have been settled in Wellington when he visited that city. m Mr. Bex : Probably an excise duty would help us. Federal Council. Mr. Bex : I have to ask you, Mr. Mills, whether the Earotonga Council can pass our laws. We are not certain whether we are under the jurisdiction of the Eesident Commissioner at Earotonga, or, if not, whose jurisdiction we are under. Hon. Mr. Mills : I believe Niue is under the Ordinances passed by the Federal Council for the Cook Islands, but I have learned since coming here that you have no representative on that Council. It is,.of course, a cardinal principle in all politics that there should be no taxation without representation. Some satisfactory arrangement must be made with reference to this matter as soon as possible, but in view of the imperfect communication between here and Earotonga it would appear to be somewhat difficult to arrange for proper representation from Niue. I wish to make certain definite arrangements with regard to the " Countess of Eanfurly " so that her time of arrival may be known more exactly and traders may rely upon her movements. The question of communication with Earotonga would then be simplified. I think that, considering the distance between the islands, it would be better if everything you require could be done by your island Council here. I should like to hear your opinions on the matter, and if you think it will be best I shall see that you are represented. I wish to point out that Colonel Gudgeon is Eesident Commissioner for the islands. He holds that position under appointment by the Governor and also under Act of Parliament. Everything must be done through him as far as possible, but the Eesident Agent may communicate with me direct in cases where a saving of time can be effected. Liquor Question. Mr. Bex : We believe that a petition has gone round the island to prohibit the importation of liquor here. We trust that the New Zealand Government will not make this a prohibition island. There is very little imported into it, and it has never been abused. We trust that the Government will not take away the little pleasure we have. Mr. Head, sen. : The Niue Islanders from the beginning, from heathen times, up to recently have been a totally abstaining people. In the old days they never even made kava. They were just a simple people, and abstained from intoxicants, and this condition of things prevailed until recent years. Now, a few months ago a large quantity of spirits was landed and placed in bond, and it was evident amongst all of us that the liquor had a bad effect. There were several cases of drunkenness, and we believe —and I have been here thirty-seven years—that prohibition would be a good thing both for the foreign residents and the Natives. §,;-> Mr. Bex : The liquor imported into this island is not being sold to the Natives, and I challenge any one to prove that one drop of liquor has been sold to a Native or given to him. There is much