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 and it is within easy communication of Thursday Island and Port Moresby. The central seat of Government would be at Port Moresby, for reasons mentioned above; and the Government Resident would have charge of that district from Hall Sound to Hula. Aroma would be another centre, extending over the Hood Bay district, and along the coast to South Cape. Dinner Island could be made another centre, to control Milne Bay, the Louisiade Archipelago, and the D'Entrecasteaux Group; while it might be found necessary to have an officer stationed at Rawden Bay, for the purpose of controlling the North-East Coast from Bentley Bay to Mitre Rock.

With regard to the natives, it had been Sir Peter Scratchley's intention to have formed depôts at these ports of entry, and elsewhere, to which the natives might be induced to bring trade. Regulations would be in force at these depôts controlling the prices to be paid to the natives, the method of conducting trading operations, &c.

As the area of square miles in the Protected Territory is estimated at 80,382 sq. miles, some portion of this might be handed over to a company for administrative and commercial purposes. It had been the intention of Sir Peter Scratchley to have encouraged in Australia the formation of a trading company on a basis somewhat similar to the British North Borneo Company. With regard, however, to the tenure of land by this proposed company, Sir Peter Scratchley consulted the experience of Sir F. Whittaker, whose opinion it will be pertinent to quote:—"I may say that, if the Australian Company is to be empowered to acquire and cultivate land, this would, I think, be very objectionable; in fact, would at once introduce into New Guinea all the objectionable features that have been incident to the colonization of New Zealand and Fiji, in an exaggerated form. If, on the other hand, the Australian New Guinea Company intends only to establish trading stations on sites to be held under license from the Crown, then I think it would be of great use in promoting the interests and civilization of the inhabitants, and therefore should receive encouragement and assistance."

Referring to the statement made by the Auditor-General of Queensland, 1st February, it will be seen that the amount received for the year 1884–5 was £15,171 the actual amount expended from 1st January, 1885, to 30th January, 1886, being £15,048. Adding £500 to this for outstanding accounts, tho total expenditure would amount to £15,548. It will be remembered that the amount £15,171 was the amount due from the Colonial Governments from 1st June, 1881, to 1st June, 1885. As the contributions for the year 1st June, 1885, to 1st June, 1886, have not yet been paid in, there is consequently a very considerable balance to the New Guinea account, and not a deficit as publicly stated.