356
THE NEW ZEALAND GAZETTE.

templated Loan, a provision calculated to remove
this doubt.

I enclose to you the copy of a letter which by my
desire has been addressed to Mr. Reader Wood, and
which will explain to you the views of Her Majesty's
Government in respect to the proposed guaranteed
loan.

I am only induced to make this offer to Mr.
Reader Wood in the full conviction that the recent
military successes, improved by a just and temperate
policy on your part, will lead to a speedy and per-
manent pacification of the Northern Island.

I have stated to Mr. Reader Wood that his ac-
ceptance of this proposal will be regarded by Her
Majesty's Government as conveying on his own part
and that of his colleagues an assurance of their
desire cordially to co-operate with you in a just and
temperate policy towards the Native race. On the
part of Her Majesty's Government I need not repeat
the instructions which were fully conveyed to you in
my Despatch No. 43, of 26th April last.

I entirely anticipate that your Ministers will be
animated by a just sense of the exertions and sacri-
fices which have already been made by the mother
country for the Colony, and that on colonial grounds
they will be as anxious as you can be yourself to
terminate the present hostilities. But it is my duty
to say to you plainly that, if unfortunately their
opinion should be different from your own as to the
terms of peace, Her Majesty's Government expect
you to act upon your own judgment, and to state to
your Ministers explicitly that an army of 10,000
English troops has been placed at your disposal for
objects of great Imperial concern, and not for the
attainment of any merely local object; that your
responsibility to the Crown is paramount; and that
you will not continue the expenditure of blood and
treasure longer than is absolutely necessary for the
establishment of a just and enduring peace.

I have, &c.,
EDWARD CARDWELL.

Governor Sir George Grey, K.С.В.,
&c.,
&c.,
&c.

Downing Street,
May 26th, 1864.

SIR,—I have the honor to inform you that Mr.
Secretary Cardwell has considered the application
which, as Finance Minister of the New Zealand Go-
vernment you have made to him, viz., that he will
propose to Parliament that the intended loan of
three millions, authorized by the recent Act of the
New Zealand Assembly, should be raised with the
assistance of an Imperial guarantee.

Mr. Cardwell has desired me to express his regret
that he cannot undertake to make to Parliament
any such proposal, nor does he think that such
a proposal could be made with any prospect
of its being approved and adopted by Parliament.
He is fully prepared, however, to consider the claims
of the Colony to a guarantee of less amount.

In a Despatch addressed to Sir George Grey on the
26th of December last, the Duke of Newcastle ex-
pressed his readiness, on the conditions there set
forth, to submit again to Parliament the proposal
for a guaranteed loan of £500,000 which had been
already submitted towards the close of the previous
session, but had been withdrawn because Mr. Crosbie
Ward, then acting for the Colony, had not deter-
mined on accepting the terms offered till the oppor-
tunity for legislation had been lost. Since it appears
to be the wish of the Colony that this arrangement
should proceed, and certainly the altered circum-
stances do not enable the Colony to dispense with
any assistance which it required when that Bill was

introduced into the House of Commons, the Secre-
tary of State is still ready to proceed with it, at your
request.

The arrangement as then made provided for a pay-
ment to the Treasury of a sum of £200,000, which
was to cover the amount of debt then due to the
Home Government. But the terms on which the
Lords of the Treasury were prepared to concur,
comprised a stipulation that provision should be at
once made for repaying all advances from the Trea-
sury Chest, with interest at the rate of four per
cent. on such as had remained unliquidated for more
than three months. It now appears that advances
have been made, either in money or in arms and
stores, amounting to somewhat short of £300,000,
thus raising the total debt to the Treasury to a sum
approaching £500,000.

If Her Majesty's Government are to submit to
Parliament a proposal for aiding the Colony by an
Imperial guarantee, the first condition will be that
out of the money so borrowed by the Colony the
whole debt due to the mother country shall, in the
first instance, be discharged. It is evident, therefore,
that if the guarantee be limited to five hundred
thousand pounds, so large a portion will be absorbed
by the debt to the Treasury, that scarcely anything
will remain to be applied either to the other purposes
contemplated in the original Bill, or to the liquida-
tion of the great subsequent expenses which have
been or will be incurred by the Colony. It is esti-
mated by you that those expenses, up to the end of
the present year, will amount to nearly eleven
hundred thousand pounds, or, excluding the debt to
the Home Government, to nearly eight hundred
thousand pounds.

Mr. Cardwell acknowledges the force and weight of
many of the considerations which have been urged by
you as reasons why the Colony should resort to a
loan for expenses which in the mother country would
be discharged, in part at least, from current revenue,
such as the fact that the whole population of the
Province of Auckland from 16 to 55 has been drawn
away by the war from industrial pursuits; that the
Southern Island, having a less immediate interest in
the suppression of the rebellion, would feel the
charge upon the annual revenue as a serious hard-
ship; that the Colony is compelled, on the return of
peace, to make large payments, both for military
purposes requiring to be wound up and discharged,
and also for prospective measures of improvement
consequent upon the return of peace, without being
able to apportion that expenditure to its present
means, or to wait for the most favourable state of the
market to bring out a loan. Mr. Cardwell also feels
that the prospect of avoiding future disturbances,
with all the accompanying evils and expenses both
to the Colony and to the mother country, will much
depend upon judicious and comprehensive measures
to be taken at the time of the restoration of peace,
and that an embarrassment in the finances of the
Colony at that juncture, would tend to prevent the
accomplishment of those measures, and to cloud that
prospect. Yet, notwithstanding these considera-
tions, he is not prepared to recommend to Parliament
a guaranteed loan to any such amount as that which
you have requested of Her Majesty's Government.

Upon the whole Mr. Cardwell concludes that the
guarantee originally promised by the Duke of New-
castle may again be submitted to Parliament, and
that the amount may be increased by the sum due,
and to be repaid to the Imperial Treasury, and by a
further sum of about £200,000, to be applicable to
the general purposes of the New Zealand Govern-
ment. The whole sum, therefore, to be guaranteed
will amount to one million, of which, as far as at
present appears, somewhat less than half will at once