No. 23.
Copy of a Despatch from the Eight Hon. Earl Grey to His Excellency the Governor-in-Chief.

I enclose copies of a correspondence which has lately taken place relative to the affairs of the New Zealand Company, which will put you in possession of an arrangement which Her Majesty's Government have thought it advisable to enter into with that association. I also transmit a copy of a Bill which will be proposed to Parliament for the more effectually carrying this arrrangement into execution.

This measure, as you will perceive, has been resolved upon by Her Majesty's Government with a view to the resumption of the systematic colonization of New Zealand. It is proposed that the New Zealand Company should for this purpose receive a grant of public money, and should be intrusted with the disposal, for three years, of the Crown demesne in the Southern Government of New Zealand; while, in order to obtain the fullest assurance that these means and trusts shall be faithfully applied to the objects aimed at by Her Majesty's Government, a Commissioner will be appointed to attend, on their behalf, the meetings of the directors of the Company, and will be invested with ample powers to control all the proceedings of that body. The Commissioner will act under the instructions of the Secretary of State, to be given from time to time as occasion may require. By this arrangement Her Majesty's Government entertaiu the hope that they, may obtain in aid of systematic colonization the energy, the ability, and experience of a body of gentlemen associated together to promote an enlightened plan of colonization, and whose private interests are identified with the success of these public objects, and possessing, as they do, the confidence of those classes from which the best description of settlers are likely to be drawn. Men of character, enterprise, and small capital, they have the means, which no Government can-possess to the same degree, of promoting and directing towards colonization that spirit of enterprise for which our population has always been remarkable. The success which attended the early operations of the Company, so far at least as regarded the collection of bodies of emigrants, admirably fitted, by their energy, perseverance, and self-reliance, for the arduous undertakings in which they embarked, affords the best ground for hoping that the same Company may again be enabled to send successive parties of equally efficient settlers to New Zealand, and that these arriving there under happier auspices may rapidly form thriving and prosperous communities. Such is the general design of Her Majesty's Government in the arrangement which they have entered into.

I shall now proceed to call your attention, to a few points the due understanding of which in the colony may, in its present state, be conducive to public good. In the first place I have to remark that, in order to dispel that jealousy of the Company of which I am sorry to perceive various symptoms in the more recent advices from the colony, it is of great importance that you should use your utmost efforts to make it generally and thoroughly understood that Her Majesty's Government, in placing for three years all the Crown demesne of the Southern Province at the disposal of the New Zealand Company, have had for their main object the public interest in promoting colonization, not the private advantage of the Company. The Company will indeed, and most justly, be remunerated, if the plan should prove successful, for its large outlay of capital; but by the provision that no dividends shall be payable except from a moderate percentage to be deducted from the gross proceeds of the sales of land which it may effect, this remuneration will be made exactly in proportion to the extent to which the Company, by its activity and good judgment, shall promote colonization. Moreover, the Company in the exercise of this trust will act under the supervision of the Government Commissioner, whose duty will obviously lead him to consider every projected operation of the Company for the disposal of Crown lands with reference, not alone to the interests of the Company, but to the interests of the public both here and in New Zealand. The proceeds of the sales and leasings of Crown lands which the Company will effect will be devoted, after the necessary deductions, to colonizing purposes and the gradual settlement of the Island. By these means it is hoped that both capital and labour may be again beneficially directed towards these Islands; that the capital already so largely invested, and the property already acquired by the actual settlers, will be enhanced in value and gain additional security. The interests of the actual settlers will thus, in the opinion of Her Majesty's Government, be more effectually promoted than by any other means which could have been adopted, since the effect of resuming colonization in augmenting the value of their lands will be certain and immediate.

I am aware, however, that an apprehension exists in the minds of many of the settlers that the benefit which may thus accrue to them will be more than neutralized by the system adopted by the Company of selling land in this country; and which will oppose a difficulty in the way of its acquisition by those who have already emigrated, and more especially to its being obtained by them upon terms consistent with its being profitably occupied for pastoral purposes. This apprehension I do not consider to be well founded. The system of permanently alienating land only by sale will indeed be strictly adhered to, and I trust that, notwithstanding the prejudice in favour of cheap land, the Company's settlers will not forget the views on which they originally emigrated, or page 175 fail to perceive that their own welfare and prosperity are vitally interested in maintaining the sound principle of colonization on which their settlements were formed. Nor is the maintenance of this principle inconsistent with the adoption of a mode of selling land which shall give every proper facility to the original settlers to extend their holdings, nor to their, being permitted also, under proper regulations, to obtain the temporary occupation of land for pastoral purposes, upon easy terms. On the latter subject I have already addressed you in another despatch, in which I have transmitted to you the papers lately laid before Parliament, which show what has been done on the same subject in New South Wales. With respect to the just desire of the present settlers to be enabled gradually to, extend their holdings, this object will be provided for by conducting in the colony, instead of in this country, the sale of lands which are near existing settlements, and by taking care that all new settlements to be formed by bodies of emigrants proceeding from this country for that purpose shall be planted in situations where they cannot injuriously interfere with those previously established.

You will continue to retain in your own hands the exclusive management of all negotiations with the Natives for the sale of their lands; but, when any transactions of this sort are concluded in the Southern Province, the New Zealand Company will provide the means of payment, from funds placed at their disposal, and have the disposal of the lands so acquired.

I have only to add that these arrangements are not to interfere with the operation of any laws which, in accordance with the intention you have expressed, you may have thought it advisable that the local Legislature should pass for the purpose of enabling the Natives, under certain restrictions, to sell their own lands. I know that you so well understand the difficulties of this subject that I am well assured I may safely rely upon your assenting to no laws of this description which are not really required by the circumstances with which you have to deal, and which do not contain the best securities that can be provided against abuse. I should also expect that in the Middle Island, which will be the principal field of the Company's renewed operations, the acquisition by the Crown of the territory required for the Company will prove a matter of no difficulty, from the extreme paucity of Native inhabitants.