I have the honour to report that, in pursuance of your instructions, I have paid the Natives of the Wairarapa the balances of 5-per-cents due to them on the 30th September last. These payments, relating to accounts that have been running from fifteen to twenty years, render it, perhaps, necessary to recall the circumstances (well known, however, to you) under which the liability arose. I may premise, then, that previous to the year 1853 large tracts of land In the Wairarapa had been rented by the settlers as runs direct from the Natives. This practice was in contravcution of the provisions of the Land Purchase Ordinance. It was desirable that settlement should be on a more page 6regular basis, and many of the tenants felt the inconvenience of their precarious tenures. Accordingly, in 1853 a vigorous effort was made by the Government to obtain land at the Wairarapa. Many large blocks were purchased, the payment being made to extend over a period of several years. In 1860 the Commissioner was thus able to report the completion of the purchase of 957,864 acres, the area including most of the rental holdings; but as the extinction of the Native title involved the sacrifice of the rents that the Natives had previously enjoyed, it was agreed between the Chief Land Purchase Commissioner (with the sanction of the Government) and the Natives that in addition to the purchase-money paid down, 5 per cent. of the net proceeds of land sales within certain of the blocks should revert to them or be expended in their benefit. The blocks bought under this agreement were the following: Turakirae, comprising 66,760 acres; Turanganui, 30,253 acres; Tuhitarata, 20,900 acres; Wharekaka and Puhangina, 28,398 acres; Moroa and Tauherenikau, 61,400 acres; Makoura, 2,291 acres; Whareama (No. 1), 11,583 acres; Whareama (No. 2), 12,931 acres; Pahaua, 107,000 acres; Manawatu, 45,550 acres: in all, 387,066 acres. In fulfilment of the agreement an account was entered at the Treasury, by which 5 percent. of the net proceeds (the expense of surveys having previously been deducted) was carried to the credit of a separate trust fund for the benefit of the Native sellers.

In 1869 the liability of the Province of Wellington, existent and prospective, for the payment of the 5-per-cents from its land revenue; was commuted by the payment of the sum of £1,200 to the General Government. In the first instance certain expenses of schools and the gratuities given to chiefs were, in virtue of agreement, charged against this fund; but, for reasons that it is beyond the scope of this report to specify, it was found roper to place these charges against other funds. The Natives had freely given up a considerable income in rents; and, as it was not desirable that they should have cause to regret their act, as few deductions as possible were consequently made from the amount that had accumulated. It must not be considered from this that the Natives were underpaid for their land: such does not appear to have been the case, and in a document attached to this report it will be seen that they now admit having received "a high relative price" for their lands. From time to time sums of money were drawn by different chiefs, and flour-mills were given or built for them. Unfortunately, in one instance, where the Natives were given the purchase-money for a mill, the intention was not advantageously carried out by them.

In 1870 Mr. Commissioner Kemp paid the Natives the sum of £2,000 on account. He did not, they state, furnish them with any accounts, or inform them of the balances which remained. Two other sums have been paid since that date.

On receiving your instructions to pay the Natives what was owing, I found that; up to the 30th September, 1873, the amount at credit of the account in the Treasury was £596 3s. 9d. I left Wellington with that amount on the 26th November, and, after transacting some Trust-Commission business at Masterton, met the Natives at Greytown, on the 5th December where the chief Manihera te Rangitakaiwaho, who had been directed to assist me, had collected the various chiefs of the sellers. Mr. Wardell, R.M., kindly presided. I found that certain Europeans had been exercising a pernicious influence with the Natives, in misrepresenting the object and extent of the deductions that had been made from the gross proceeds. The Natives found that the amount I had with me (£596 3s. 9d.) was very small in comparison with the sum of £2,000 paid to them in 1870; and, as land had risen in value, population was coming in, and the place prospering, they could not understand how the amount could be so small. Their counsellors had pointed out these things, but had not told how the income must necessarily be a decreasing one, as the balance of unsold land became annually less, or how the high prices ruling were on private, not Government, land sales. Mistrusting, then, to some extent the accounts, a committee had been organized to scrutinize my figures in regard to areas sold and moneys paid. The committee consisted chiefly of members of the old Hauhau party, and had, as their spokesman, a man who had been active a short time since with Henare Matua at Hawke's Bay and elsewhere. I was not sorry at their determination to attack the accounts vigorously, as I felt assured that the eventual result would be a better acquaintance with the subject than the younger Natives at present had, and a clearing-away of some causes of dissatisfaction. I found it convenient to prepare a debtor and creditor account, block by block, treating each purchase as a separate transaction. The Natives did not at first understand this method; several of the chiefs being interested in a plurality of blocks, and desiring to be paid upon them collectively. The inferior Natives, who were only interested in one block, however, saw the advantage of distinct accounts, and now all desire that the accounts may be rendered to them in such manner in the future.

Turanganui and Turakirae.

These two blocks are clubbed together because upon them, in common, certain advances had been made—sets-off in the account of the 5-per-cents—payable to the Natives of the Lower Valley.

The accumulation of "koha" on these blocks to 30th September, 1873, together with £77 10s., proceeds of sale of machinery, amounted to £856 16s. 7¼d., against which there were sets-off as follows: Payments to Raniera, £78; ditto for purchase of mill and dressing-machine, £300; ditto by Mr. Kemp, £450: total, £828. Balance, £28 10s. 7¼d.

There was also a charge of £150 against Turanganui in the early accounts, but not in the more recent. The sum had been given to Raniera, and used by him in paying his debts without the tribe deriving benefit therefrom. There was considerable opposition to any advance for this mill being charged as against "koha." The mill, they said, had never been of service to the people; it had lain in Bethune and Hunter's store, they averred, until liable to £40 as a charge for storage, and was sold at a price below its proper value. The Upper Valley Natives maintained that Raniera had appropriated the proceeds on the eventual sale of the machinery. It was, however, no business of theirs, and I repressed the interference; they were, moreover, wrong. The mill it appeared had been sold in Wellington to the Hon. H. Russell, M.L.C., and Mr. John Russell was in possession of the sum of £77 10s., the net proceeds.

In respect to the Turakirae Block, Manihera and Wi Kingi claimed "koha" for Taita, Mangaroa, page 7and Pakuratahi, stating that the purchase extended over those lands, and even to the source of a stream falling to the West Coast. They produced Mr. J. McKenzie, who stated that at a meeting in 1853, at Turanganui, he heard Sir George Grey tell the selling Natives that the 5-per-cents should extend over those lands. I resisted this, stating that, although their claim to certain land at the Upper Hutt, previously bought of Ngatitama and Ngatiawa, might have been extinguished by the purchases and payments made in 1853, yet it could never have been intended that 5-per-cents could be paid for the Hutt, which, had been sold by the New Zealand Company long previously. On obtaining a copy of the deed from Wellington, it was found that they were in error, the Rimutaka Range being the boundary.

Tuhitarata.

This is one of the Lower Valley blocks. On account of Manihera and his brother Eruera being amongst the sellers, and their having had nothing to do in the matter of the mill advance to Raniera, it was determined to charge that advance to the debit of Turakirae and Turanganui only.

The total accumulations of "koha" to 30th September, 1873, amounted to £265 4s. 2d.; the payments on account to £200; balance, £65 4s. 2d.; which sum I paid, giving a copy in Maori of the account current.

Wharekaka and Puhangina.

On this purchase the accumulation of 5-per-cents amounted to £566 12s. 3d., and advances to £255, leaving a balance of £311 12s. 3d. The committee, unable to question anything on the credit (Government) side of the account, attacked the debtor side, and employed a surveyor to check the areas stated to have been sold, and on which the calculations were based, with the area known to be sold on the ground. This occupied three days, and. at the termination of that time we were informed that "the difference found was too slight to be of any account." The money was then taken, and receipts signed in Maori and English, a marginal plan being drawn on each-receipt, to prevent the possibility of any future misapprehension as to locality.

Moroa and Tauherenikau.

The accumulation of "koha" on this purchase amounted, according to returns, on 30th September, 1873, to £1,027 8s. 1½d.; the charges against the Natives to £366 17s. In November, 1870, Mr. Kemp paid £430 to the sellers, but did not make any specific deduction for the above charges. Manihera and the other Natives interested objected to the set-off of £366 17s. on the following ground: (1) That they had never received the money; (2) that the accounts should have been furnished to them at the time, or, certainly, at last payment; and (3) that the charge for mills, of which this was one, had been promised to be wiped off in the account against them. To the first of these I was able to show that £150 of the money had been asked for in writing by Manihera, and that the sum of £366 17s. had remained constantly in the accounts, while other charges had been wiped out. In reference to the second reason, I was able to offer no sufficient excuse. In reference to the third, I showed that the original cost of mill had been wiped out of the account, but that the charge of £366 17s. was for repairs after the earthquakes of 1855, and was not affected by the circumstances that caused the remission of the charge for the erection. After a long discussion, I was enabled to maintain this charge as a set-off.

In the returns of land sold, as received from Commissioner of Crown Lands previous to leaving Wellington, no account has been taken of about 14,000 acres of sold land, supposed to be within this block, and to lie between the Waiohine and the Waingawa Rivers. Before this matter could be settled it was necessary to establish, on the ground, the exact position of the boundary of the Moroa purchase, which had never been done by survey. On the 9th of December, in company with Mr. T. E. Young, I went over this boundary, tracing it out on the plan according to the Native names in the deed of cession. We obtained, the services of Hori Taha—a Native well acquainted with the locality and the old names—to point out the positions, while Matiha Mokai and Roimata went to check Hori Taha's accuracy. The tracing attached, marked A, shows, in red, the boundary thus defined. By this it appeared that 14,602 acres had been sold within the limit, and that a further sum of £348 2s., (net 5-per-cehts) was due upon it. I obtained this money, and paid it to the Moroa Natives on the 16th instant.

In 1853 the chiefs Manihera te Rangitakaiwaho and Wi Kingi Tutepakehirangi, principal owners of the Moroa District, made a free gift of a block of land to Chief Commissioner McLean, "in consequence of the satisfaction they felt at the manner in which Mr. McLean had conducted land purchases in the vicinity, and the high relative price he had paid to all of them for the adjacent lands." The means of surveying this piece of land were not at the time at command, and, for want of an accurate knowledge of its figure and area, the execution of a deed of gift was deferred until the matter was lost sight of. Nearly all the contiguous land became Crown property by purchase, and this piece, being on either side of the main road from Tauherenikau Bridge to Greytown, was included in a, sectional survey arid granted by the Crown. Although given, the land was yet to yield "5-per-cents." Seeing that, in taking receipts for the 5-per-cents, an opportunity presented itself of obtaining a formal ratification of the free gift, and the Natives being well inclined, I drew up, in conjunction with Mr. E. S. Maunsell, licensed interpreter of Greytown, the attached document. (B), by which the two chiefs above mentioned ratify their gift, and fifteen others, principal people of the district, confirm it. The marginal plan attached shows the boundaries-as given by Manihera to me. The area comprised is 5,000 acres. The total accumulation of 5-per-cents on the Moroa and Tauherenikau Blocks was thus £1,375 10s. 1½d.; the advances made were £796 17s.; leaving a balance of £578 13s. 1½d. due to the Natives, which I paid them.

Makoura Block.

The last sales in this block took place in 1861, and the 5-per-cents amounted to £54 8s. 3d. This exhausted the area of the block, and with it the possibility of further accumulation of "koha." The Natives were, on the 4th January, 1863, paid the sum of £54 8s. 3d. In November, 1870, Mr. Kemp paid the sum of £100 on 5-per-cents in this block. The Natives attributed this payment to page 8the high price at which land has been lately sold (privately) in Masterton, and looted to me to make a similar payment to them as Mr. Kemp had made. After a very long and tedious discussion, I caused them to understand the real position of the account and the terms of the contract, and they ceased to ask for payment. I do not show this block in my account current, as I had no payment to make on it; and, by the sale of all its land, it has for some years passed from the list of 5-per-cent. blocks.

Whareama Block No. 1.

On this block I paid the sum of £27 1s. 3d. Mr. Kemp, in 1870, had paid the sum of £110, and the Natives looked for a similar amount from me. On going into the accounts, however, I was able to show them that I was paying all that was due.

Whareama Block No. 2.

On this block the total amount of accumulated 5-per-cents was, in 1870, £111 16s. 1d.; Mr. Kemp paid £110, and £9 15s. have accrued since, thus leaving a balance of £11 11s. Id., which I paid. The Natives could not understand how so small a sum was at their credit, and were a long time examining the accounts before they were satisfied.

Pahaua.

On this block the accumulations to the 30th September, 1873, amounted to £484 10s. 10½d., and the payments to £350 only; but I found an item on a letter in Dr. Featherston's handwriting, showing that £60 was lent to the late chief Wereta, one of the sellers, in 1862, and I required that it should be regarded as a set-off. After some considerable discussion this was allowed, but great opposition was raised to the payment, in 1872, of £100 to Te Hei, who was not, they stated, authorized to receive it. This chief woman was at Hawke's Bay, and no one appeared to speak for her. With a great deal of difficulty I induced the Natives to agree to the sum of £45 out of the £100, the decision as to the remainder to stand over until they can have Te Hei face to face with them. There is a sum of £39 0s. 10¾d. recently accrued on "koha" that I have yet in hand, and I propose that it should be detained until the matter is satisfactorily settled.

Manawatu Block.

Up to 30th June, 1869, the accumulations of 5-per-cents were £88 19s. 4d.; the money paid on account, £54 4s. 11d. Mr. Kemp paid £100, leaving the Natives in debt to the Government in the sum of £65 5s. 7d. The Crown Lands Department had omitted to send in returns of the land sold by the province to the General Government for Scandinavian settlers; hence the sum of £142 10s. had not been carried in the Treasury to the credit of the fund. Finding this out while on the ground, I was enabled to represent the circumstance, and eventually to obtain the money. £79 7s. 2d. was now available for the Natives, who, however, demanded £100, urging the large amount—£3,000 for 4,000 acres—that had been received since last payment of "koha," and the impropriety of their being charged with the sum of £54 4s. 11d. paid to Ngatuere by Hon. W. Mantell's directions so far back as 1863, and respecting which they ought to have received accounts before last payment in 1870 instead of now. This was the most difficult matter of all to settle. Ngatuere's name does not appear amongst the sellers of Manawatu, and it was alleged that he had received the money for private purposes, and not for distribution amongst the sellers. Ngatuere did not appear able to satisfy the meeting; and although the money was eventually taken, and in good temper, yet some of the recipients expressed an intention of inquiring further into the matter.

The excitement caused by the disturbance near Otaki, and subsequently the death of Manihera's sister, very much delayed the proceedings. In pursuance of the expressed wish of the Natives of the Upper Valley, I paid the 5-per-cents for that locality at Masterton. I am happy to say that when the system of accounts was understood, and copies of the accounts current, in Maori, given in respect to each distinct block, all obstructiveness and opposition ceased, and Hikawera, the advocate or spokesman of the Committee, aided me in completing the work, and assisted Mr. Maunsell and myself in obtaining the confirmation of the free gift. With the exception of the outstanding matter of £55, which could not be settled owing to Te Hei's absence at Hawke's Bay, there is now an undisputed and balanced account for each block to the 30th September, 1873, being the day to which each is worked up. The uncertain boundaries of the free-gift land and the Northern Moroa are defined on the sectional plans. The vexatious mill debts at Papawai and the Lower Valley are cleared off, £666 17s. being established and carried to the (Government) credit side of the account. The sum of £60, not in previous accounts, lent by Sir George Grey's direction to the late Wereta Tainui, has been recovered from his people, and £77 10s., proceeds of the sale of machinery to Hon. H. Russell in 1870, obtained from that gentlemen's agent and paid to the Natives whose property it was.

I have to express my sense of the very valuable services of Mr. T. E. Young, who was with me as interpreter, and by whose aid many difficulties that beset the whole subject were cleared away. Mr. Carroll, who succeeded Mr. Young, was very useful, and is, I think, an excellent interpreter.