THE AGREEMENT WITH LORD JOHN RUSSELL.

211r. Vernon Smith to Mr. Somes, Downing Street, 18th November 1840.

Sir—Lord John Russell has had under his consideration the letter which, on the 22d ultimo, you addressed to him on behalf of the gentlemen who have been associated together under the name of he " New Zealand Company." In reference to my letter of the 29th October, informing you that in a few days the draft of an arrangement would be transmitted to you, and that Lord John Russell could not anticipate that there would be any condition to which the Company would entertain any serious objection, I now, by his Lordship's direction, transmit to you that draft. Lord John Russell would be glad to be informed whether the Company are disposed to accede to the terms which are there proposed. In that event his Lordship will be prepared to consider the draft of any charter of incorporation -which the Company may be desirous to receive; and which, in the first instance, bbould be prepared by themselves. On receiving an intimation of the Company's assent to this proposal, Lord John Russell will answer that part of your letter of the 22d October which requests information respecting the general principles by which the Crown proposes to be guided in its measures for the government mid colonization of New Zealand.

I

sin, &c. R. VERNON .SMITH.

,Toseph Soma, Esq.

[The Draft referred to in Mr. Vernon Smith's Letter.] • Appendix to Committee's Report, pp. 233-239.

The arrangements to be entered into between he: Majesty's Government and the Association who have been hitherto acting un.der the title of the "New Zealand Company," may be arranged under the follos ing heads. I. The adjustment, retrospectively, of the claims which the Company has established to favourable consideration for themselves and for the emigrants whom they have sent to New Zealand.

IL The incorporation of the Company, with a view to futiv'e operations.

Ill. The powers which will be vested in the incorporate1.1 body, and the terms on which the Government will deal with them in regard 10 Crown-lauds in New Zealand.

I. First, then, with regard to the retrospective adjustment of the claims of the Company. I. It being understood that the Company have invested large sums ft` money in the purchase of lands in New Zealand from the Native chiefs and others; in the taking up, chartering, and despatching ships for the conveyance of eon-grants thither; in the maintenance of such emigrants before and during the outward voyage ; in the purchase and transmission of stores for the public use of the settlers collectively on their arrival ; in surveys ; in the erection of buildings, or the execution of other works dedicated exclusively to the public service of the settlement ; and in other heads of expenditure or absolute liabilities, unavoidably required or reasonably incurred for the beforementioned purposes; it is agreed that an estimate be forthwith made of this outlay, under the different heads thus enumerated. In making. that estimate, no item shall be admitted which shall not be found to have been Just and moderate in amount, and fairly demanded by the exigencies of the service to be performed. 2. The abovementioned estimate shall be made by one or more accountants, to be named by Lord John Russell, and to be paid by the Company. His Lordship would propose for this purpose Mr. James Pennington; who should be assisted by such clerks and copyists as he might have occasion to employ. 3. If necessary, Lord John Russell will also nomiante an accountant to execute, on the same terms, the corresponding duty within the colony itself, in reference to such parts of the abovementioned expenditure as can be correctly ascertained and calculared there only. 4. When the amount of the above-mentioned expenditure shall have been ascertained, the Company shall be secured by a grant from the Crown to them, under the public seal of the colony, of as many acres of land as shall be equal to four times the number of pounds sterling which they shall be found to have expended in the manner and for the purposes abovementioned : suck expenditure, so far as it may have been incurred in this country, to be calculated down to the date of the present agreement ; and so far as it may have been incurred in the colony, to be calculated down to the time of the receipt by the Governor of a copy of tbe agreement. 5. The lands so to be assigned to the Company shall be taken by them in that part of the colony of New Zealand at which their settlement has been formed, and to which they have laid claim in virtue of contracts made by them with the Natives or others, antecedently to the arrival of Captain Hobson as her Majesty's Lieutenant-Governor at New Zealand. Within those local limits the Company shall select the lands so to be granted to them. The selection is to be made within six months after the receipt by the Governor of a copy of this agreement. 6. The lands so to be selected by the Company, as last aforesaid, shall comprise all tracts to which any persons have derived title through them ; provided that such tracts he situate at or in the neighbourhood of Port Nicholson, or at or in the neighbourhood of New Plymouth; and also provided that such tracts shall not collectively amount to more than 160,000 acres; and provided further, that no such tracts shall be such as, regard being had to the general interests of the colonists at large, ought to be reserved and appropriated for any purposes of public utility, convenience, or recreation. With the exception of the beforementioned tracts, the land to be selected by the Company as aforesaid shall be taken by them in one or more blocks. Of such blocks, any number not exceeding six may be of the size of not less than 5,000 acres each, and the rest of the size of not less than 30,000 acres each. Every such block shall be one continuous tract. Each block shall be bounded, as far as may be possible, by the natural landmarks of the country. As far as such natural landmarks may admit, each block shall be as nearly as possible a solid parallelogram, of which no one side shall be more than twice the length of any other side. 7. It is, however, to be distinctly understood, that if, previously to the receipt of a copy of this agreement by the Governor of New Zealand, any tract of land to which any persons derive title through the Company should by the local Government have been lawfully entered upon and resumed on behalf of her Majesty, and should have been lawfully granted or located to any other person or persons, nothing herein contained shall be construed as defeating the rights of any such new grantees or locatees, or as binding the Government to a specific restitution of such lands, or to make compensation to the persons BO dispossessed for the loss of them.

8. The Government will complete the survey of the external lines of every block of land assigned to the Company, but will not effect the interior survey or subdivision of it. The Company will be allowed, in account with the Government, credit for the amount saved to the Government by leaving the interior survey of the beforementioned blocks unmade. For the amount of the credit which may so accrue to the Company, they shall be entitled to demand. from the Government payment in laud, at the price at which, at the time of making any such demand, the waste lands of the Crown shall be selling in New Zealand. Provided always, that the credit so to accrue to the Company for the amount saved to the Government as aforesaid, shall be estimated according to a general scale hereafter to be settled, in which scale the average price of the surveys of land shall be fixed and determined. That scale shall be drawn up by arbitrators of whom two shall he chosen by the Government and two by the Company ; the majority of whom shall have power to determine the average price of surveying for every 1,000 acres. It' the four arbitrators should be equally divided in opinion as to what ought to be allowed for such average price, they shall appoint an umpire, whose decision on the question in dispute shall be final.

9. The lands thus to be granted to the Company are to be held by them subject to all such general laws and regulations as are, or at any time shall he, in force in New Zealand in reference to other lands granted to private persons there; and especially to all laws having for their object the opening of public roads' wharves, quays, or other such like works, and securing to the public at large free access to and the free use of all sea-ports, landing-places, and navigable rivers.

10. All public works and buildings included in the abovementioned estimate are to vest in and become the property of the Crown, in trust for the public uses of the colony, should the Governor require them for such purpose. 11. The Company forego and disclaim all title, or pretence of title, to any lands purchased or acquired by them in New Zealand, other than the lands Bo to be granted to them as aforesaid, and other than any lands which may hereafter be purchased or acquired by them from the Crown, or from persons de:riving their title from the Crown. 12. The Company having sold, or contracted to sell, lands to various persons her Majesty's Government disclaim all liability for making good any such sales or contract.; it being, nevertheless, understood that the Company will, from the lauds so to be granted to them as aforesaid, fulfil and carry into effect all such their sales or contracts.

13. It being also understood, that the Company have entered into engagements for the reservation of certain lands for the benefit of the Natives, it is red that,inrespect d)f the lands tober granted Company as esaidreservatinssuctlandsshal be nadefihevefitoftinatives

by her Majesty's Government, in fulfilment of and according to the tenonr of such stipulations ; the Government reserving to themselves, in respect of all other lands, to make such arrangements as to them shall seem just and expedient for the benefit of the Natives.

II. With regard to the incorporation of the Company, I. Her Majesty will be advised to grant a charter of incorporation to the Company. 2. The charter will contain all such conditions as may appear to her Majesty's Government to be necessary for the good government of the Company, and for the security of the public at large in dealing with them. 3. The charter will be granted for the term of forty years; and will contain provisions enabling the Crown within that term to resume the charter, and to purchase the lands and other property of the Company, on just and equitable terms, if the public interest should require such a resumption and purchase. 4. The objects of the incorporation will be declared to be the purchase, sale, settlement, and cultivation of lands in New Zealand, and the advancement of money on the security of lands situate there, for promoting the cultivation of such lands.

As incidental to these main objects, the Company will be authorized to purchase and hire ships, and to engage with emigrants for their passage to the colony ; it being expressly stipulated that all such ships and emigrants shall be under the superintendence of and approved by the Government, or its officers in this country and in the colony. The capital will be fixed at ,* with an express prohibition on the Company against their engaging in banking or any other commercial undertakings.

III. With regard to the powers of the Company, and the terms on which the Government will hereafter deal with them.

1. The Company may acquire by purchase, except from the Natives, any lands in New Zealand which they may think proper to buy. 2. If the Company shall, at any one time, purchase from the Government 50,000 acres of land, and pay for the same in ready money, a discount of • per cent, together with allowance for surveys, shall be allowed on every such payment.

3. All lands sold to the Company shall be so sold and taken by them subject to all the general rules on the subject of surveys and otherwise, as shall be in force in regard to any other purchaser.

4. For the present, her Majesty's Government engage that all sums of money which shall be paid by the Company for the purchase of land in New Zealand, shall, whenever such money shall be paid in this country, be laid out in the removal of emigrants to New Zealand ; it being left to the Government from time to time to determine whether such money shall be so laid out by the Commissioners of Colonial Lands and Emigration, or by the Company themselves, under the superintendence and with the concurrence and sanction of those Commissioners.

Finally, Lord John Russell will instruct the Governor of New Zealand to recommend to the Local Legislature the enactment of a law, basing for its object to incorporate as a municipal body, with the usual powers, the settlers who have, at the charge of the Company, resorted to Port Nicholson, and settled themselves there or in that vicinity.

Mr. Somes to Lord John Russell.

New Zealand House, Broad Street Buildings, 19th November 1840. My Lord—I have the honour to acknowledge the receipt of a letter dated the 18th instant, from Mr. Vernon Smith, enclosing, by your Lordship's directions, the draft of the arrangement proposed by your Lordship. These have been laid before the Court of Directors at its meeting this day; and I have great pleasure in being able to assure your Lordship in their name, as well as my own, that the terms are not only such as we have no hesitation in accepting, but that in the liberal and judicious principles on which they are framed, we see ample ground for the fullest confidence in the spirit in which her Majesty's Government is prepared to execute them. The Court of Directors has given instructions for preparing without delay the draft of a charter of incorporation; which will, I trust, in a few day s be submitted for your Lordship's approval.

I am also desired by the Court to acknowledge with gratitude the intimation contained in Mr. Vernon Smith's letter, of your Lordship's intention of communicating the information which was requested respecting the general principles by which the Crown proposes to be guided in its measures for the government and colonization of New Zealand.

I have the honour to be, my Lord, your most obedient servant,

The Right Hon. Lord John Russell. Josses' SOMES, Governor.