[Enclosure No. 3.]
James Stephen To A. Y. Spearman, Esq.
(No. 3.)

I am directed by the Marquis of Normanby to request that you will lay before the Lords Commissioners of the Treasury the enclosed copies of a correspondence which has passed between this Department and the Foreign Office relative to the establishment of some competent British authority within the Islands of New Zealand.

The letter, which was addressed by Lord Glenelg’s direction to Mr. Backhouse on the 12th of December last, will inform their Lordships of the general state of society in those islands, and page 741 since that date circumstances have transpired which have further tended to force upon Her Majesty’s Government the adoption of measures for providing for the government of the Queen’s subjects resident in or resorting to New Zealand.

With that view it is proposed that certain parts of the Islands of New Zealand should be added to the Colony of New South Wales, as a dependency of that Government, and Captain Hobson, R.N., who has been selected to proceed as British Consul, will also be appointed to the office of Lieutenant-Governor. It is further proposed to instruct Governor Sir George Gipps to recommend to the Legislative Council of New South Wales the enactment of all necessary laws for raising in New Zealand a revenue adequate to the maintenance of the Lieutenant-Governor, and of such other officers as may be indispensable for his assistance in the administration of the affairs of the settlement. Lord Normanby proposes to authorise the payment to Captain Hobson from the revenue so to be raised of £500 per annum, in addition to his salary as Consul. It will probably be also necessary to provide for the appointment of a Judge, of a Public Prosecutor, of a Colonial Secretary, of a Police establishment, of a Treasurer, and of the subordinate officers of revenue. In the present stage of the business it is impossible to state with any degree of exactness the number or emolument of these officers. Lord Normanby can, therefore, only request the concurrence of the Lords of the Treasury in delegating to Sir George Gipps a general authority to make all the necessary arrangements on the most moderate scale, and on the express condition that the expense shall be defrayed entirely from a revenue to be raised within the settlement itself. In the meantime there are some inevitable expenses for the passage and outfit of Captain Hobson for which Lord Normanby is of opinion provision should be made; and with the concurrence of the Lords Commissioners His Lordship would propose that this expense should be defrayed by the Agent for New South Wales, as the settlement would be a dependency of that colony; but conceiving that there should be separate accounts of the revenue of New Zealand, His Lordship would propose that the advance thus to be made should be considered as a debt to be repaid to the Treasurer of New South Wales from that of New Zealand on the earliest opportunity.

Although Lord Normanby is unable now to state with precision the precise amount of this expenditure, it would be as low as possible. In addition to the expense of the voyage, it must involve the purchase of a frame house for the immediate reception of the Lieutenant-Governor, and of some articles which would be required for his immediate use in the public service, such for page 742 example as stationery; and of these, an estimate will be sent to the Lords Commissioners as soon as their Lordships’ acquiessence in the general principle shall have been signified to Lord Normanby.