gether with the goods and property undisposed of in said islands in the hands of Mr. George Collie, shipped from hence for that purpose. These goods were subsequently disposed of upon profitable terms, and proceeds applied to the purchase of lands. The agreement alluded to with Mr. Webb, as you are aware, provided that he should have the option of taking an interest at cost price amounting to fifty-four hundredths of lands purchased, and a harbour, the location of which was to be approved of by an agent appointed by him. In consideration of such option, Mr. Webb, on behalf of the United States, New Zealand, and Australian Mail Company, agreed to make the harbour in such Navigators' Islands a port of call by the steamers of the said line. Mr. Webb appointed Captain E. Wakeman his agent. That gentleman having proceeded to the Navigators' Islands, named the harbour of Pago-Pago in the island of Tutuila (one of the best in the South Pacific) as the port of call aforesaid, and satisfactorily reported on the richness of the neighbouring lands and on their great future commercial value. It was then determined that I should proceed to the scene of our operations at the Navigators' Islands, with a view to facilitate the acquisition of lands, and generally to take such action as might seem best in the interest of the Company.

'Accordingly the schooner Witch Queen was purchased, and a cargo of the most saleable goods having been selected, I sailed from San Francisco in February last, and reached Upolu on the 2nd April following. Upon my arrival I found that the United States ship of war Narragansett, Commander Meade, U.S.N., had

been there, and taken action, the importance of which in the Company's interest it is impossible to overrate. Commander Meade had entered into a treaty on behalf of the United States (subject to ratification of Congress) with the chief of Pago-Pago for the cession of the harbour of that name to the United States for the purposes of a coaling depot and naval station, guaranteeing to the people of the island protection from all foreign enemies, confirming them in the possession of their lands, and recognising their right to sell or dispose of the same as they may think fit.

'Having secured the hearty co-operation and valuable assistance of the United States Commercial agent and of her Britannic Majesty's Consul at Upolu, I succeeded in purchasing from the high chiefs of the islands of Upolu, Savaii, Manono, and Tutuila, 414 square miles of land, making with the quantity previously purchased a total of about 300,000 acres acquired and now the property of this Company, as will appear from the accompanying documents signed by the chiefs and owners, and certified to by the signatures and seals of office of the officials named.

'Prior to my arrival, the British and American residents had produced in the minds of the high chiefs a very strong desire that the islands should be annexed to the United States. During my visit the Consuls called a meeting of all the chiefs interested, and annexation was fully discussed and received the unanimous approval of the high chiefs, Consuls, missionaries, white residents, and natives of these islands. A petition to his Excellency the President of the

United States of America was adopted and signed by the chiefs, from which the following is a translation: We, the chiefs and rulers of Samoa, deem it necessary for our future well-being and better establishment of Christianity, free institutions, fellowship of mankind, protection of life and property, and to secure the blessings of liberty and free-trade to ourselves and future generations, do petition the President of the United States of America to annex these our islands to the United States of America."

'During my stay arrangements were perfected for the establishment of our Commercial depot, stores were obtained, and our goods were being readily disposed of in exchange for money and the articles of commerce which the islands produce. The natives of the Samoan Islands, like those of most of the surrounding groups, are exceedingly anxious to trade and to obtain European articles of clothing, etc., and nothing is wanting but the adding the links of that vast chain of commercial intercourse among the innumerable islands of the South Pacific which this Company has in view in order to build up a trade, the limits of which it would be difficult to-day to set bounds to. Having left proper agents in charge under Mr. Collie, I sailed from the islands more than ever impressed with the great future promise, as well as of the present value, of our enterprise.

'Upon my return to San Francisco it seemed desirable, before further action was determined on, to obtain the decision of Mr. W. H. Webb in relation to his right

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to exercise his option of taking at cost price fifty-four hundredths of the lands purchased. I accordingly proceeded to New York, where that gentleman then was; and after exhibiting the whole of the documents, showing that in every particular the stipulations of our agreement had been complied with, Mr. Webb assured me that he was unable to take up the interest referred to, but would be glad to do so when he had received aid from Congress, but at the present time he gives up his option of participating in the lands purchased.

'Leaving New York, I proceeded to Washington with a view of ascertaining the probable action of the United States Government in reference to the petition of the people of Samoa for annexation. I learned, through the kind offices of Senator Cole and others, that in preference to annexation the Government would look with more favour upon the establishment of a local government composed of the resident white settlers and of the natives, and based upon the model of that of the Hawaiian Islands. By the next mail a letter to that effect from the Secretary of State, Washington, will be forwarded to the people of Samoa.* As there need be no difficulty in at once forming such a government, and as I saw many advantages likely to accrue to the Company from its formation, I at once favoured that course, and cannot help congratulating the

It has since been ascertained that if it be thought preferable, in the interests of the commerce of the Pacific, that annexation should take place, no insuperable objections to that course need be feared.

Company upon the success of this negotiation. Recognised by the United States of America, and with a naval station established in their midst, the new Government will come come into existence with a moral power and influence greater even than that possessed by the successful Government of Hawaii.

'Having thus narrated our proceedings up to the present, I venture confidently to recommend as follows:

'That at the time that may hereafter be deemed most fitting, the necessary steps be taken to form a Government for the Samoan or Navigators' Islands, based upon the model of the present Government of Hawaii.

'In consequence of Mr. Webb not paying fiftyfour hundredths of the purchases made, unexpectedly large quantities of valuable. land are offered for purchase to the Company. The increasing opportunities that are opening up among the Fiji, Society, Friendly, and the innumerable other groups of islands in the South Pacific for the distribution of goods from the Company's central depot, by means of small steamers, and the small amount of capital upon which this Company was formed, render it apparent that our capital must in some manner be greatly increased. The question is as to the best way to accomplish this. In view of the great demands being made in all parts of the State for money, and the unprecedented rates of interest now prevailing here, it would seem best to seek aid from abroad. I would