5. Since these communications took place it appears that Colonel Wakefield had been misinformed, and that, in point of fact, no arrangement had been entered into, by which her Majesty’s Government undertook to find the funds required for the acquisition of lands for the New Zealand Company; but on the contrary, Earl Grey expressly instructed the Governor-in-Chief that such funds must be provided by the Company itself, unless in the case of the district required for the Canterbury settlement, where his Lordship consented to sanction an advance being made from the local revenue for the purpose, if able to meet such a demand.

6. In both Colonel Wakefield’s letter and my own reply to it (above referred to), there is also this further assumption, that the funds to be advanced by the Government were to be repaid out of the Parliamentary loan of £36,000, to be advanced to the New Zealand Company between the 5th April, 1849, and 5th April, 1850; but no portion of that sum seems to have been set apart for the purpose of such repayments, or any provision made against the whole amount being at once paid over to the New Zealand Company in England at the commencement of the year.

7. Another and not an unimportant consideration is, that although it is inferred in the communications I have referred to, that the New Zealand Company will be able to choose out of the various blocks purchased such lands as they may wish to constitute portions of the 1,300,000 acres of land to which they are entitled, and as the rest will again devolve upon the Crown, they ought only to pay such share of the expenses of obtaining the several districts as their proportion of land in each may bear to the whole district, yet it is nowhere provided when the Company shall complete this exercise of selection, or at what stated period the Crown shall be able, by making beneficial application of the surplus lands, to reimburse itself for the outlay incurred, the Local Government being consequently, by meeting the expenses attendant upon the land purchases, in the position of advancing funds to enable the New Zealand Company to carry out their colonizing operations, without the power of deriving any corresponding pecuniary returns, or the prospect of the debt thus accumulating being speedily repaid.

8. This in so young a community, where the local revenue is not sufficient to meet the current expenditure, is a matter of grave consideration; nor do I see how it is possible, under such circumstances, and in the absence of any Parliamentary provision to meet the expenditure referred to, for the Local Government to continue to employ special agents and incur heavy expenses in the acquisition of lands for the New Zealand Company.

9. For the reasons above stated it will be apparent, that the second ground urged in your letters of the 11th February, is not a valid one, or the comparison fairly put; because in reality the Government are called upon to incur in that capacity a heavy outlay, for the early reimbursement of which no provision is made.

10. In conclusion, I can only add, that I will lose no time in bringing under the notice of His Excellency the Governor-in-Chief the difficulty which has arisen, and in requesting special instructions from His Excellency on the subject.

11. I regret that, although my letter was commenced on the 17th ultimo, it has not been in my power to complete it until to-day painful family intelligence from Europe having reached me, and prevented my giving that full consideration to the subject which I wished at an earlier date.

I have, &c.,

(Signed) E. EYRE.

W. Fox, Esq.,
Acting Principal Agent to N. Z. Company,
&c., &c., &c.

A true copy—J. D. Ormond.

Copy.

Wellington, 20th February, 1849.

Sir,

I have the honor to acknowledge the receipt of your Excellency’s letter of the 17th instant, and beg to express my sincere regret at the cause to which you allude as having prevented its earlier transmission.

In my letter of the 16th instant, to which it is a reply, I confined myself chiefly to a consideration of the practice in previous cases of negotiation and purchase from the Natives, one of which in particular (that of the Otago block) still appears to me exactly in point, as involving no more political considerations or urgency than the acquisition of the Port Cooper district. But your Excellency has adverted to the positions of the Government and Company in reference to the existing arrangements and the objects with a view to which the Parliamentary loan was made to the latter. The inferences which are drawn by you would have had much weight with me but for the following consideration, to which, as you express an intention of referring the matter to the Governor-in-Chief, I shall feel obliged by your directing His Excellency’s attention:

At the time when the existing arrangements alluded to were made, and the Parliamentary loan accepted by the Company, after an estimate of its probable requirements during the three years over which it was to extend, her Majesty’s Principal Secretary of State for the Colonies had, in his Despatch of the 23rd December, 1846, addressed to