My reasons for believing that the trade between this Colony and the South Pacific Islands might be greatly extended are based upon the following facts :—

(1).	The Natural Position occupied by New Zealand as Entrepot for Island Products, and for Shipping Merchandise to the Islands.—Auckland is the nearest harbour of any importance to these Islands, being 750 miles nearer to Tonga than Sydney is, and 1300 miles nearer to Tahiti than is San Francisco, which latter port has at present almost a complete monopoly of the import trade of the Society Islands.
(2).	The Suitability of the Products of New Zealand for Island Consumption.—The Pacific Islanders consume immense quantities of flour, biscuits, preserved meat and fish, soap, etc., in the supplying of which New Zealand ought to be able to compete successfully with the world. The value of flour and biscuits imported last year was £52,000; preserved meat and fish,£31,000; soap, timber, etc., £30,000; or in all, £113,000 worth of articles produced in New Zealand; while cotton and drapery goods were imported to the value of £125,000—a grand total of £238,000, which might be supplied by or through New Zealand. The consumpt of these articles must steadily increase, especially in the Tonga and Samoa groups, where the natives have adopted European modes of life to a very limited extent as yet.
(3).	The Superiority of certain New Zealand Products over those of Sydney and San Francisco.—Auckland salt and tinned meats are largely consumed and are generally considered to be superior to the American and Australian brands, though I found a few traders who preferred the Sydney meats. This superiority our exporters should do their utmost to maintain, and they should pay greater attention to the careful packing of the meat and the artistic adornment of the tins. New Zealand potatoes, onions, cheese, etc., are greatly in request among the European residents, but as the natives do not use these articles, the market for them is limited.
(4).	The Enormous Natural Resources the Islands.—There are in these islands land and labour sufficient (were they utilised and directed) to produce twenty-fold more than at present. This is especially true of the Samoa, Tonga, and Society Groups, where there are extensive areas of uncultivated land and a numerous native population. The British West Indies, with an area of 13,000 square miles, had in 1871 a total trade of £10,000,000; and the Pacific Islands, with an area of 4,000 square miles, might soon (were the natives to adopt European habits of living and page 57 industry) have a trade worth £5,000,000. Even that large sum would be doubled were an additional supply of labourers available.
(5).	Regular and Rapid Communication.—From the close connection now established between New Zealand and the Islands, by the two-monthly running of the mail steamer Janet Nicoll, this colony should secure the larger portion of the increase of trade.