No. 2.
The Under Secretary Native Department, to I. N. Watt, Esq.

Sir,—

I have the honour to acknowledge the receipt of your letter No. 184 of the 21st of March, in which you enquire whether the £2,000, part purchase money of Stewart's Island reserved for educational purposes, or the interest upon it is available for paying the Native share of the salary of masters at Ruapuke and Riverton, and in reply I am to inform you that Mr. Clarke has been written to, and requested to state what was his understanding as to who were entitled to receive the proceeds of the lands to be bought with the one-third of the purchase money.

In the meantime I may state that it has been determined, on the advice of the Attorney-General, at once to expend this £2,000 in land in Southland, and with this object you are requested to place an advertisement in the Southland papers, to the effect that a tenant is wanted for 2,000 acres of land, at such place as the tenant may point out, being Crown land in the Province of Southland. Applications to be made to yourself stating the locality, the terms that would be given and other particulars, before a fixed date.

These applications when received should be forwarded to this office with your remarks on each. It is very improbable that the proceeds of this land will, for some time to come, be sufficient to meet all the demands upon it for educational and other purposes, even if it is only applicable for Natives in Foveaux's Strait, and it is clear that the whole proceeds ought not to be devoted to one school at Ruapuke, and the sum of £90, as promised by the Government, would seem to be as large a share as could be expected by these Natives.

As, however, it appears that both you and Mr. Wohlers have given the Natives to understand that the school would be established free of cost, and as the Government is very anxious that there should be no further delay in the matter, the Government will leave it with you to make the best arrangement that can be made under the circumstances for say two years certainly; you will however bear in mind that both in justice to the other Natives interested, and also with a view to promote an interest in the school's success, some small payment should be insisted on if it can possibly be so arranged.

I am to beg that no time be lost in securing a master who should be some one accustomed to teaching and recommended by the Board of Education in Otago.

I may state that if any difficulty is found in obtaining a master, there are several in this Province who could be sent at once. It is very essential that a man of method experience and undoubted character should be obtained, no other consideration should be allowed to have any weight.