liquidate it by gradual instalments.

After having formerly advocated Free Grants of Land to Military Settlers, I am very reluctantly forced to admit that the system, instead of conferring a single advantage, has proved a serious impediment to the progress of the Province, and has not really been any great boon to the class it was intended to benefit. It is, in fact, notorious, that in a very large number of cases, the land orders have been sold for the merest trifle; that a large majority of the soldiers to whom they were issued have left the Province, and that in the few instances in which the parties themselves have selected and settled upon their land, they deny their liability to pay local rates until their land order has been converted into a Crown grant, thus rendering it necessary for the district in which they reside to impose much heavier rates for roads and schools than would otherwise be required, and at the same time depriving the settlers of the benefits of the Fencing Act. In addition to these objections to the system, there is the further one of the heavy expense entailed upon the Province by the survey of so many small and isolated allotments. In order that you may be enabled to appreciate the magnitude of the drain thus established upon your resources, a return will be laid before you, showing that assuming that all the claims sent in up to the present time are allowed, you will, during the last two years, have given away some 80,000 acres (the survey of which will cost above £2000) without really having in any appreciable degree promoted the settlement of the country. To prevent such abuses of the system, for the future, and to promote actual settlement, I would recommend that instead of allowing unlimited freedom of selection over the whole Province, certain blocks of good and available land—for example at Waitotara—should be set apart within which alone these military land orders should be exercised.

While by the establishment of the Light House on Pencarrow Head, you have rendered your port easy of access at all times and in all weathers, and have by the erection of a Deep Water Wharf and Bonded Warehouse, and by laying down moorings, given every possible facility for the loading and unloading of vessels, you have still to supply one great requirement. The difficulty, or rather impossibility, of getting vessels of any size either repaired or cleaned, has ever been urged as a serious drawback to this harbor. But when you consider the immense increase that has taken place within the last two or three years in the shipping frequenting this port, the returns showing, for example, that the tonnage has increased from 49,900 tons in 1861, to 72,289 tons in 1862; when you remember that whereas some eight years ago, the first steamer that arrived in New Zealand was on the point of being sent back to England, under the plea that there could not possibly be employment for steamers in New Zealand during the time of this generation, there is now ploughing the New Zealand seas a very considerable fleet of steamers; when you look to the development of your Local Steam Company, to the manner in which they are extending their operations, to the determination they evince to make Wellington at any rate the centre of Steam; and lastly when you remember that the chief object of the Postmaster General’s mission to England is to establish the Panama Route, and that he has himself expressed a strong opinion in favour of this port being the port of call and departure, I think you will agree with me, that the time has come when you must have either a floating dock or patent slip. Far from desiring to conceal the magnitude of the work to which I thus invite you, I at once state, that from all the information I have gathered, I believe a floating dock, capable of taking in a vessel of 1200 tons, will not cost less than £20,000, and that a patent slip will involve an expenditure of from £30,000 to £40,000. But I see no difficulty in providing the ways and means, without in the slightest degree encroaching upon those funds which derived from the sale of lands ought to be employed in opening up the country.

In a former address I pointed out that all the works which might (looked at from a narrow point of view) be considered as exclusively for the benefit of Wellington, will be productive of a revenue, which in a few years will repay the capital expended on them. The Lighthouse, erected at a cost of between £6000 and £7000, will, when light dues are imposed, as I hope they will at once be by the Central Marine Board on a moderate scale, yield from £1000 to £1500 a year. The Wharf and Bonded Stores, which, with their appurtenances, will cost £20,000, will, when in full operation, yield not less than £3500. But more than this—the profit hitherto made on the sale of the reclaimed land has been over 100 per cent. The value of the unsold portion is above £20,000, and a considerable sum may at any time be realized by selling the frontage on Lambton Quay, between the Odd Fellows’ Hall and Kumutoto. As these funds might fairly be applied to such a work, it will scarcely be urged against the proposal, especially as a Patent slip could not possibly be constructed in less than two years, that there would be any diversion of funds from their legitimate purposes, or that there would be any difficulty in providing whatever amount might be required.

Whatever doubts may have been expressed as to the necessity of a bridge over the Wanganui River, when first proposed, none can now possibly be entertained by those who have witnessed the immense and rapidly increasing traffic over it,—a traffic so great that the ferryman has recently offered to establish a steam ferry at his own expense,—provided he be guaranteed against a bridge being built, or any other ferry allowed, for a certain number of years. But as this would scarcely be an improvement upon the existing ferry, I am glad to state that the inhabitants of Wanganui have expressed their readiness to form a company to build the bridge on condition that the Council will give a sum equal to the amount raised by the company, and will further hand over to the company the tolls of the bridge until the capital of the company, with interest thereon, has been repaid. This appears to me so fair and liberal an offer on the part of the settlers of Wanganui that I shall submit a bill to enable them to carry it out.

Messrs. Gladstone & Co having declined to submit the Ann Wilson’s accounts and other matters in dispute between the n and the Province to arbitration, but having at the same time expressed their readiness to leave their adjustment upon not unreasonable conditions entirely in my hands, I have, acting upon the authority you gave me in a resolution passed last session, made them proposals, which I have every reason to believe they will accept, and which I hope you will deem fair and liberal.

The Commissioners of City Reserves have made an application, which I recommend to your favorable consideration for a sum sufficient to repurchase some eighty acres of the Town Belt given some years back by the Acting Commissioner of Native Reserves to the Natives. Probably this application will suggest to you the expediency of instituting inquiries into similar dealings with public reserves, and as to how far the objects for which the public have been deprived of valuable properties have been carried out. I refer especially to the grants of a large portion of the town of Wanganui, and of a portion of the Belt of this city for industrial schools.

Before laying before you the Estimates of Income and Expenditure for the current year, I am anxious, in order to correct some misapprehensions, to call your attention to those of the past. Charges are, year after year, made against the Government, that the estimated Receipts are not realized, and that your votes are not expended. A very slight examination of the Audited Accounts for the financial year ended on the 31st of last month, and which will be laid before you in the course of a few days, will enable you to satisfy yourselves how far these accusations are well founded. I have already alluded to the difference