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communication with Wanganui in spite of
the strong opposition at one time evinced
by the Natives, and the speedy extension
of the line to Patea, is another gratifying
event, especially as evidencing that there
is little prospect of the peaceful relations
between the two races being disturbed in
this Province. And I am not without
hope that an equally cheerful prospect is
dawning in reference to the relation of
the races over the whole Island. Our
information is as yet too indefinite to
enable us to judge accurately of the
eventual result of Mr M’Lean’s late
visit to the King party at Waikato. The
bare fact that after maintaining for years
a resolute isolation, the King party
should have invited the Government to
meet them with a view to the establishment of friendly relations, is, however, so
significant a step in the right direction,
that we cannot help indulging in the
most favorable anticipations. The confidence which had been growing during
the last few months, both in the minds
of the friendly and neutral Natives, as
well as amongst the European settlers,
has already been very materially strengthened by the friendly attitude of these
Waikato and Ngatimaniapoto tribes.
Should the Government be able to secure
the co-operation of the King party in
putting down rebellion, the difficulty
which has so long kept back this Island
from developing its abundant resources
may be considered as virtually at an end.

Although His Excellency has been
pleased to delegate to me his powers
under the Gold Fields Act, I regret to
say that at present there has been no
necessity for my making use of them.
The energy displayed by the settlers of
Wanganui in prospecting the Kaimanawa
Ranges, and that of those here in working
the reefs in the neighbourhood of
Makara have, however, resulted in proving that the quartz is of an auriferous
character. The analyses which have
been made at Auckland of quartz from
both these districts, establish beyond
doubt that such is the case, and in the
opinion of many well qualified to judge
the discovery of payable fields is only a
question of time.

The attention which is everywhere
being given to the preparation of the
native flax also deserves notice, as it
must play a most beneficial part towards
removing the depression which the low
price of our hitherto staple export, has
lately spread over this as well as the
other Provinces of the Colony.

The action brought before the Appeal
Court by Messrs Kennards, in reference
to the Patent Slip dispute, having resulted
in a judgement for the province, I would
venture to suggest that you should pass
an Act authorising me to come to some
amicable arrangement, Mr Howard Kennard having already, in a private note,
expressed his desire to effect one. And
knowing as I do the mind of the Council
on this question, I think you may rest
assured that I shall not enter into any
agreement or contract of which you might

subsequently disapprove. I press this
matter the more urgently upon you because in the event, as appears more than
probable, of steam communication being
established between San Francisco and
Australia, we can only hope to have Wellington made the port of call in New Zealand
by affording the requisite facilities
for cleaning and repairing vessels, either
by the erection of a Slip or the creation
of Docks. And when it is considered
that the voyage from New Zealand to
England would be reduced to thirty-five
days, that we shall be brought within
three weeks telegraphic communication
with Europe, and that a great trade is
certain to spring up between the United
States and these Colonies, I think you
will agree with me that we should make
every effort to secure these advantages as
far as possible for this port.

Although, as I have already stated, all
existing liabilities will be cleared off, still
I must frankly tell you that the revenue
will not, until peace is established on a
firm and permanent basis, and the Rangitikei block thrown open for sale, be more
than sufficient to meet the ordinary expenditure and the permanent appropriations.

From the Chief Surveyor’s report you
will learn that he hopes with the strength
of the Survey staff moderately increased,
to have the trigonometrical survey of the
whole block executed, and some 120,000
acres ready for sale, within six months
from the commencement of operations.
It is proposed after the trig. is executed
to have the block laid off in square miles,
as was done in the agricultural reserve in
Rangitikei, and then to put up the land
for sale by auction at the upset price of
£1 an acre—it being competent to any
intending purchaser to require the Government to put up for sale a particular
block, or any portion of it. All parties
will thus compete on equal terms, and the
province will be spared the expense of detailed surveys not required, and will obtain the market value of the land.

You will remember that in the session
of 1860 you passed a series of resolutions
in which you recommended that a block of
thirty thousand acres should be placed, on
certain conditions, at the disposal of a
Small Farm Association; the principal
conditions being, that a further block
should be annexed to the reserve of thirty
thousand acres for the purpose of commenage—that the land should be sold to
the association at £1 an acre—that the
Government should make the main road
through the block, lay off bye-roads, execute all necessary surveys, and lay off any
reserves necessary for public purposes.

Three associations at once sprung into
existence; two of them paid money into
the Provincial chest, but the whole three
associations some time since collapsed,
and withdrew all their money with interest at the rate of eight per cent, less a
sum of between £700 and £800 belonging
to some twenty or twenty-five members
of the Hutt Association.

Since, however, the native title has