no corresponding augmentation is necessary in the Government expenditure, and bearing in mind that the aid this Province has hitherto received from the Parliamentary Grant has been chiefly devoted to great public works, and will for the future be almost exclusively devoted to that purpose, there can be no doubt that, under an economical administration of its finances, it will shortly be able to provide the means of defraying the entire cost of its civil Government, thus relieving Great Britain from all charges which are not connected with the Naval or Military expenditure.

There are two points connected with that portion of your duties, which relates to subjects of general interest for the whole Islands, which I am anxious to bring under your notice, viz.,—the subject of Steam Communication between the various settlements, and the subject of a loan for the purpose of promoting Emigration.

Upon the first of the above points I would offer the following observations for your consideration. You are aware that the purchasers of land in the Nelson settlement have set apart a fund for the purpose of promoting Steam Navigation in Cook’s Straits, which now amounts, I believe, with interest, to nearly fourteen thousand pounds. An essential part of the plan I propose for your consideration is, that the Nelson settlers should expend this sum in bringing out emigrants to Nelson in such proportion in each year, and under such system as, after due consideration, they may think most likely to promote the interests of that settlement.

The subject of communication by steam, which appears to be one of general interest rather than peculiar to one settlement, might then be taken up by the Governments of the several provinces. To promote such a plan, I would, upon behalf of the general Government, give up the Government Brig, and an annual sum of about eighteen hundred pounds, the yearly cost of that vessel. If to this amount the Legislature of each Province would add its proportionate annual vote, a considerable sum would be available each year for the purposes of Steam Navigation; and as the whole management of the Post Office is now in the hands of the Local Government, I think, with the amount of about £5000 yearly at its disposal, it might easily contract for the delivery at, and carriage of mails between, the principal settlements in New Zealand by steamers of a sufficient tonnage; the proprietors of the steamers being allowed to make such arrangements regarding the conveyance of passengers and goods as they might consider most advantageous for their own interests.

I earnestly recommend the consideration of this measure to your attention, as one which is calculated in no ordinary degree to promote the prosperity of every portion of these Islands.

The second measure of general interest I have to recommend for your consideration is, the subject of a loan for the purposes of immigration. One of the great wants always experienced in a new settlement is that of some safe mode of investment for funds which are in the hands of the trustees of savings banks, of benefit societies, and of other similar associations. I think, therefore, that a great benefit might be conferred upon the public, and that a great advantage might be secured to the colony, by the Government being authorized by law, to sell, at par, debentures in sums of not less than fifty pounds each, bearing interest at five per cent., for a total amount of twenty-thousand pounds, the whole amount realized by the sale of such debentures to be immediately expended in bringing out immigrants to this country.

It would be necessary to make the interest payable on these debentures a first charge upon that portion of the revenue of the colony which is under the control of this Council, and to secure their ultimate repayment from the same source. It would also be requisite to authorize the Government to sell these debentures from time to time, as they might be applied for at the Colonial Treasury, as it is probable that a considerable period might elapse before the debentures for the whole amount could be disposed of. The Council would further have to determine some date before which it would not be in the power of the Government to call these debentures in. It is, however, sufficient for me to indicate the general plan which I recommend for the consideration of the Council, leaving it to yourselves, if you are favorable to the measure, after consultation with the persons best qualified to give advice on such subjects, to modify the details in such manner as you may judge most expedient.

In reference to that portion of your duties which relates to the removal of the difficulties which stand in the way of an immediate introduction of a representative government into the New Zealand Islands, I should inform you that I have proposed for Her Majesty’s Government the plan of a complete system of representative government; which might, I think, if no wholly unforeseen difficulties occur, be introduced into the whole of New Zealand in a period of about four years from the present time. If this plan should be approved by Her Majesty’s advisers, I shall have to rely upon the wisdom of the Legislative Council of each Province for the adaptation of the details of the plan to their particular district. In the meantime I trust that they will, by their regularity, order, and diligence in the despatch of business, give an example worthy of the imitation of all future legislative bodies in New Zealand. I rely also upon