sources the current expenditure of this financial year will be fully met. But to meet the liabilities to the Banks for the past expenditure, I have to propose to you that a loan should be raised. Such works as those on roads, which entailed this large outlay, are fairly chargeable on the Land Fund—and raising a loan now to meet those liabilities, amounts in effect to an application by anticipation of a part of the land revenue to their discharge. As you may be aware, the General Government declined to recommend the Governor to assent to the Loan Bill for the Oreti Railway, until a tract of country of about 68,000 acres was set apart in security for, and applicable to, its liquidation. On a similar security I do not doubt that the assent of His Excellency will be given to the Loan which I propose now, which is to be applied specifically to the extinction of the debt now due to the Bank. The lands set apart in this way will be administered in the same way as other Crown Lands in the Province, but the revenues arising from their sale will be applicable only to the extinction of the debt secured on them, under the direction of the Colonial Treasurer. This rule, which the present General Government has adopted, appeared to the Representatives of Southland to be one which should not have been applied to the loan in question, inasmuch as the Provincial Government had previously received from the General Government of the day an assurance that the Loan Bill would receive a favourable consideration—though at the same time approving of the principle on which it was based, the operation of which will unquestionably tend to maintain the credit of New Zealand Securities in the Stock Market.

In the late Session of the General Assembly, an Act was passed to authorise the construction of those portions of the Bluff and Invercargill Railway leading through the towns of Invercargill and Campbelltown. It appears that the works on the Bluff and Invercargill Railway have expanded so greatly in the course of constructing the line—being at the same time of a more substantial and permanent character in many places than they were as originally designed—that the sum of £140,000 will be insufficient to meet the expense. I lay before you reports on the subject from Messrs Heale, Dundas, and Marchant; from these it will appear that a further sum of not less than £35,000 will be required to meet increased cost consequent on alterations and additional works; in order to leave a margin for contingencies, I have to propose to you to raise the sum of £40,000 as a specific loan, in order to complete the work; in this case also, it will be necessary to set apart a tract of land in security for the repayment of the loan.

The General Assembly also passed an Act to regulate the sale of Crown Lands in this Province; as originally introduced, it proposed to abolish the improvement clauses of the current regulations as regards future purchases, to clear up the confusion into which titles to land are falling in consequence of the operation of those clauses by permitting a commutation of their conditions as regards former purchases in case it should be found that the Supreme Court decided that the agreement to fulfil those conditions was valid—and it proposed to continue the price at twenty shillings an acre, reserving a power to the Governor to raise the price in the event of the Provincial authorities desiring it. It was found, however, that the Bill would not pass through the Houses of Assembly unless the price was raised to forty shillings an acre. Under the circumstances, the members from Southland considered it the most judicious course to assent to the alteration.

I regret to say that the members for Southland were unsuccessful in the attempt to obtain for the Province an increased representation, such as its prosperity and importance justly entitles it to. A Bill was introduced by Mr Bell, which proposed to give three additional members for the Province. In its progress it was the subject of frequent and keen discussion, and underwent various changes; in its final stage it provided for only two additional members for Southland, besides some other members for other Provinces; but the opposition to the Bill was so determined and pertinacious, that it finally was abandoned.

In the occurrence of pleuro-pneumonia in cattle which has lately appeared, the Province has been visited by the most serious calamity which has yet befallen it. The various reports on the subject, and the regulations which have been made with a view of arresting the progress of the disease, will be laid before you. I trust you will give this subject your attention, and consider whether any further measures can be adopted, calculated to arrest the course of the malady; or if that should prove to be impracticable, to mitigate its virulence, and lessen the probable mortality.

I have to inform you that after several