The whole question is exceedingly embarrassing, and I confess I can see no satisfactory solution of it unless by mutual compromise and concession on the part of the various interests concerned.

If in your wisdom you can devise any means of meeting the difficulty, I shall be glad. The subject is one which can be dealt with authoritatively by the Colonial Legislature only, with whom your views would, no doubt, have considerable influence.

The enormous demand for timber which has of late years sprung up has attracted attention to the value of our forests, and to the importance of conserving and utilising them. The subject is at present engaging the attention of the Colonial Government, with a view to legislation by the General Assembly.

In the meantime the folly of free-granting the forests, containing as they do timber worth thousands of pounds an acre to be turned into caloric, has so forcibly presented itself to my mind that I have allowed the provisions of the Special Settlement Act to stand very much in abeyance, a course of action in which it is hoped you will concur, the more especially as the number of those who have applied to take advantage of the Act has been almost nil.

There can be no question that this Province possesses in its forests a mine of wealth, the value of which it is difficult to estimate, and which, as population increases, will no doubt be turned to profitable account.

Next to conserving our forests, perhaps the most important problem to be solved at the present time is how best to deal with the auriferous lands of the Province. As you are aware, all lands, the freehold of which is now being acquired from the Crown, is liable to be resumed for mining purposes. The question which it behoves us seriously to consider, is—how is the gold to be extracted without destroying for ever the surface of the soil, and without the footstep of the alluvial miner leaving desolation behind it? No one who travels through the Gold Fields can help being struck with the many fertile spots which have been rendered barren.

Sale of Auriferous Lands.

My own strong conviction is that the only practical remedy against the evil for the future is, that the miner should possess the freehold of the land in which he is mining. In this case he would have a strong inducement to preserve and replace the surface soil. No doubt this suggestion is surrounded with practical difficulties. They are difficulties, however, which I venture to think might be overcome; and I feel assured that, if the miners could see their own interests, they would unanimously petition the Legislature in this direction. Were this suggestion given effect to, there would be no necessity for Miners’ Rights, Gold Fields Staff, or gold duty.

In what has been said, I hope I shall not be regarded as seeking to underrate or depreciate the mining interest. What I desire is to attach the mining population to the soil, to give them an interest in preserving it, so that it may produce to themselves and those who succeed them golden grains in all time coming, after the precious metal shall have been extracted.

Last year I submitted to you a proposal, by which the Dunedin Lunatic Asylum might be rendered to a great extent self-sustaining, and the personal comfort of the patients, as well as their chance of recovery, promoted; the subject, however, seems to have escaped your notice. I venture to hope that you will this session enable me to carry the proposal in question into effect. If so, provision can at the same time be made for a special portion of the Asylum being set apart for inebriates.

Railways.

Gentlemen,—The various branch Railways authorised by you last session have been contracted for at rates which, looking at the advance in the price of labor and materials, may be considered satisfactory. You will be asked to sanction further important branch lines this session, among which may be enumerated the following:—From the main line, up the Valley of the Waihemo, across the Taieri plain to Outram, to the Tokomairiro and Kaitangata coal field, through the island of Inch Clutha, and to Tapanui, and to the Night-cap coal fields. It is hoped that the whole of these branches may be completed as soon as the main lines, to which they will act as important feeders. Instead of forcing land into the market to pay for these lines, I would propose that power be applied for to the General Assembly at its next session to raise money on loan for their construction upon the security of specific blocks of land.

Last year, as you are aware, a Bill was passed through the House of Representatives authorising, subject to your approval, an extension of the Lawrence line to the