Bay of Islands.

At the Bay; of Islands, arrangements for the purchase of lands by this department were not commenced until the 1st of June, 1855, when Mr. Kemp was instructed to carry on this duty. He was subsequently recalled to Auckland, so that he has only, as yet, been enabled to complete the purchase of 10,000 acres, at a cost of £700. The Natives of that district have offered to dispose of several blocks of land to the Government, varying in extent from-1,000 to 8,000 acres each.

On the 17th November, 1855, instructions were issued to Mr. Kemp (a copy of which is herewith enclosed) to proceed to Mangonui, and use every exertion to acquire such lands in that vicinity as would be eligible for the location of a body of immigrants expected from Toronto, if sufficient inducement could be held out to them to establish themselves in this colony. From what I can gather from Mr. Kemp's reports, which I have already furnished, the Native chiefs were not inclined to dispose of the Victoria Valley, which from its fine rich soil and situation would be the most eligible site for such a settlement; but, at the same time, Mr. Kemp expresses an opinion that the valley might be obtained if certain reserves were made for the Natives, and a sum of £2,000 placed at his disposal to effect the purchase.

I estimate that 100,000 acres might be obtained in the Bay of Islands District during the ensuing year at an outlay of £6,000.