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earnings of the schooner, I find it impossible to recommend that her services be retained as a Government institution. It is, of course, true that the " Countess " has been of material assistance in developing the Islands, and has enabled me to visit and supervise the Islands in a manner I could not otherwise have done; but I am of opinion that if the " Countess " were sold to-morrow the Union Steamship Company would replace her at once, and that at least one other schooner would be placed in the trade. Traders are now alive to the value of the outlying islands. I have, &0., W. E. Gudgeon, Resident Commissioner. The Hon. C. H. Mills, Minister for the Islands, Wellington.

No. 137. Sir, — Rarotonga, Cook Islands, 4th February, 1904. In reply to your letter No. 181, of the 22nd December, I have the honour to inform you that the introduction of the New Zealand tariff doubled the price of the very thin claret, which is almost a necessity of life in this climate, and completely stopped all sales, so that during the following twelve months none was sold, for the reason that people could not afford to drink claret at 2s. a bottle. This state of things prevailed until the Reverend Mother of the Sisters of St. Joseph became very ill, and it was represented to me by the doctor that these French ladies had always been used to yin ordinaire and ought to have it, but that they could not, as Teaching Sisters of Charity, afford to pay 6s. per gallon on wine that could be bought for 3s. per gallon. Under the above circumstances I decided to refund 4s. a gallon out of the Group revenue, with the result that we now collect some £30 per annum on the 2s. per gallon, whereas at 6s. we got nothing. I have, &c, W. E. Gudgeon, Resident Commissioner. The Hon. C. H. Mills, Minister for the Islands, Wellington.

No. 125

No. 138. Sir, — Rarotonga, Cook Islands, 4th February, 1904. I have the honour to acknowledge the receipt of your letter No. 178, of the 17th December. I regret that there seems to be no possibility of establishing a fortnightly steam service to the Cook Islands on a payable footing. The returns received from oranges are at all times very small indeed, and the wonder is that the Natives should continue to ship any fruit to the so-called middlemen to sell, for they receive nothing from them. Moreover, the steamers are so managed as almost invariably to miss the market for us. An instance of this occurred during the last holiday season : our fruit should have been in Auckland just before Christmas Day, but the steamer was so managed that she did not leave Rarotonga for Auckland until that day, and so we lost the sales during the holiday season. When the " Rotokino did arrive in New Zealand there was the week's delay of which Laery and Co. complain, and I submit that the excuse offered by the company's agent does not exonerate them from blame. They put on an old tub and reckon that she will take nine days to do the six daj's' trip, and because she does it in seven days, owing to exceptionally fine weather, the fruit is left in Auckland from Friday to Tuesda}' and is rotten when it arrives in the south, where our only reliable market is. In November Mr S. Davies received £14 net return for his venture; in December, for a similar quantity', he received a debit note for 125., owing to the failure of the Union Company to meet the Auckland cargo. That these things would be less likely to happen if we had a service running south alternately is certain ; but the fruit-sellers here believe that they have always to play second fiddle to Fiji, and, therefore, they will not risk the expenditure incidental to increased production unless there be some sign of protection. That this Group could supply nearly all of the bananas required by New Zealand is, I think, probable, but the methods of the Union Company do not inspire confidence, and I am therefore of opinion that these Islands will extend their fruit production very gradually. I have, &c, W. E. Gudgeon, The Hon. C. H. Mills, Minister for the Islands. Resident Commissioner.

No. 117.

No. 139. Sir, — Rarotonga, Cook Islands, sth February, 1904. In reply to your letter No. 197, of the 23rd January, I have the honour to inform you that I have ordered a notice for the next Gazette informing the public of the Cook Islands that Mr. C. F. Maxwell has been appointed Resident Commissioner of Niue. The appointment is an excellent one, and will remove the feeling of jealousy that will always exist against Rarotonga so long as Makea lives. That is the true secret of the jealousy. Tongia is a nobody, and Makea does not hesitate to let him know this. I have, &c, W. E. Gudgeon, Resident Commissioner. The Hon. C. H. Mills, Minister for the Islands, Wellington.

No. 132