THE NEW ZEALAND GAZETTE. 357

be repaid to the Imperial Exchequer, and somewhat
more than half will be applied to purposes of the
Colony, for the pacification of the North Island, and
liquidating the expenses of the war. This should be
raised at a rate of interest not exceeding 4 per cent.,
with 2 per cent. for sinking fund.

The actual ordinary revenue of the year 1862-3
amounted to £549,963 which exceeded by £259,296
the necessary expenses of the General Government.
The revenue of the Colony has hitherto rapidly in-
creased, and is estimated for the current year at
£691,600; and the whole of this revenue, with its
prospective increase, is to be the security for the
loan.

Mr. Cardwell thinks that this security is sufficient,
and excludes the risk that any actual payment will
fall to be discharged by the Imperial Treasury. He
leaves out of consideration the land pledged by the
Act of the Assembly, which he cannot regard as
adding anything definite, or certainly and immedi-
ately available in the way of security.

I am directed to observe, that Mr. Cardwell makes
this offer to you as the Finance Minister of New
Zealand, in the confident expectation and belief that
the recent successes of the Queen's Forces and of
the Colonial Militia and Volunteers will have placed
in the Governor's hands the power of securing a
just and permanent peace; and that his own disposi-
tion, and the instructions which have been addressed
to him from this department, will ensure his using
that power for the early termination of the war. It
is only under this conviction that the Secretary of
State can undertake to submit this proposal to
Parliament; and if the proposal be accepted by you,
your acceptance must be understood as conveying
on your part and that of your coleagues in the Go-
vernment of New Zealand an assurance of their
desire cordially to co-operate with the Governor in
this just and temperate policy towards the native
race.

It only remains that, at Mr. Cardwell's direction,
I should state the views of Her Majesty's Govern-
ment with respect to the future relations between
the mother country and the Colony in respect of
military expenditure. Hitherto, the contribution of
the Colony has been merely nominal, being £5 per
man, which recently has not been paid into the Im-
perial exchequer, but almost entirely employed for
native purposes in New Zealand. Her Majesty's
Government feel themselves imparatively called upon
to provide, that if, under the New Zealand Govern-
ment, to whom in ordinary times the management of
native affairs now almost exclusively belongs, the
Colony shall again be involved in a civil war, the
whole expense of the troops engaged in that war
shall not fall upon the mother country. They ac-
knowledge that New Zealand differs from the Aus-
tralian Colonies in this respect, viz., that the presence
of a large native population renders necessary the
presence of some military force, even in times of
peace. This force they propose to fix at one regi-
ment, and for that one regiment they do not propose
to charge the Colony of New Zealand with the
amount which it is proposed to charge upon the
Australian Colonies. They will expect that in con-
sideration of this one regiment being maintained at
the charge of the Imperial Treasury, the Colony will
continue to devote the sum of £50,000 per annum
to native purposes of the nature indicated in Sir
George Grey's Despatch of the 6th December, 1861,
including the government of native districts, and the
moral and material advancement of the native race,
but excluding the maintenance of any military or
semi-military force for the suppression of disturbance.
For every soldier over and above this one regiment
Her Majesty's Government will expect the Colony

to pay in future the same amount which has been
proposed to the Australian Colonies, viz., the sum of
£40 for every infantry soldier, and £55 for every
artilleryman. These measures they regard as just
measures of security against the risk of war being
incurred by Colonial policy, while the principal ex-
penses would fall to be discharged, not by the
Colonial, but by the Imperial Treasury.

This arrangement should commence at the term-
ination of the present arrangement, viz., at the close
of the present year; but as it is not possible that
the large army now in New Zealand can be altogether
removed from the island before the 1st January,
1865, they will so far delay the period of its applica-
tion as to agree that in the year 1865 it shall not be
applicable to any force beyond 4,000 men, in addition
to the one regiment which is to be maintained at the
exclusive cost of the Home Government.

Arrangements of this kind must of course be sub-
ject to revision hereafter, especially in a Colony like
New Zealand, where a few years may bring with
them a very altered state of circumstances.

The whole arrangement, therefore, may be thus
summed up :—

1. That the original guarantee be extended from
   half a million to one million, of which probably rather
   less than half will be paid into the Imperial Treasury,
   and the remainder will be applicable to the purposes
   of the Colony.

2. That after allowing for one regiment, New
   Zealand shall pay to the Imperial Treasury the same
   contribution as that which it is proposed that the
   Australian Colonies shall pay.

3. That inasmuch as the mother country furnishes
   one regiment, in consideration of the many circum-
   stances connected with the presence in New Zealand
   of a large native population, the sum now paid out
   of Colonial funds for the especial benefit of that
   population, viz., £50,000, shall continue undimin-
   ished.

4. That New Zealand shall not pay upon more
   than 4,000 men in the year 1865.

I am, &c.
F. ROGERS.

Reader Wood, Esq.
&c. &c.

Westminster Palace Hotel,
May 28, 1864.

SIR,—I beg to acknowledge the receipt of your
letter of the 26th instant, in which you state that
Mr. Secretary Cordwell will submit to Parliament, at
my request, a proposal to guarantee one million
of the loan sanctioned by the New Zealand Legisla-
ture, upon the following conditions :—

1. That out of the funds borrowed by the Colony
   under the guarantee of the Imperial Parliament, all
   debts due to the mother country shall be discharged.

2. That a proposal to guarantee any portion of
   this loan can be submitted to Parliament by Mr.
   Cardwell only under an assurance from me that the
   Colonial Government desires cordially to co-operate
   with the Governor of New Zealand in that just and
   temperate policy towards the native race which is
   believed to be in accordance with his Excellency's
   own feelings, and which is embodied in the instruc-
   tions which have been addressed to him by Mr.
   Cardwell, under date April 26, 1864.

With regard to the first of these conditions, I
agree, immediately upon the funds being raised, to
repay to the mother country all debts due, amount-
ing, as far as can at present be ascertained, to some-
thing less than £500,000.

With reference to the second, I take this opportu-
nity of stating formally and officially that which I