I have the honour to acknowledge the receipt of your letter of the 13th inst., in which you intimate your readiness to accept the arrangement proposed by me at our recent interview, whereby the debt of the Transvaal State to Her Majesty's Government would be reduced by £127,000. I will not delay to recommend this proposal to the consideration of Her Majesty's Government.

I have considered the representations and suggestions made in the fourth and following paragraphs of your letter, and I do not think it would now be practicable to carry out the arrangements which you propose for the settlement of the questions referred to. Her Majesty's Government are willing, however, that the 20th Article of the Convention of Pretoria shall be retained in the new Convention, with such verbal alterations as are requisite, and I am glad to understand that this course will meet your views.

When I had the pleasure of receiving you here on the 8th inst. we discussed the other principal questions which, in addition to those of the boundary and the debt, you had submitted to me in previous correspondence, and I explained to you generally the nature and extent of the concessions which Her Majesty's Government would be able to make in regard to them. You were satisfied with these explanations, as far as they were put before you; and the progress which has been made appears to me to render it convenient that I should now transmit for your perusal a draft of the new Convention which Her Majesty's Government propose in substitution for the Convention of Pretoria. In this draft the Articles of the Convention of Pretoria, which will be no longer in force, have been printed alongside of the proposed new Articles, and where an Article is retained and altered, the alterations have been shown in order to explain clearly the changes which will be made. You will find that in the draft, and the map which accompanies it, the conclusions which have been arrived at in the course of our communications have been closely adhered to and accurately expressed, and I trust that you will experience no difficulty in understanding and agreeing to each of its provisions. If, however, there should be any point as to which you are doubtful, it may be convenient that you should again meet me here and receive such further explanations as may be desirable.

It does not appear to me to be necessary that I should refer in detail to each Article of the draft. You will observe that in the preamble and throughout the Convention the wish of your Government that the designation "South African Republic" should be substituted for "Transvaal State" has been complied with. In the first Article the extension of the Western boundary is precisely defined as agreed to. By the omission of those Articles of the Convention of Pretoria which assigned to Her Majesty and to the British Resident certain specific powers and functions connected with the internal government and the foreign relations of the Transvaal State your Government will be left free to govern the country without interference, and to conduct its diplomatic intercourse and shape its foreign policy subject only to the requirement embodied in the fourth Article of the new draft—that any treaty with a foreign State shall not have effect without the approval of the Queen.

There are other provisions in the draft which have not been the subject of discussion with you; they are for the most part a renewal of those declarations made on behalf of the Transvaal State in the Convention of Pretoria, which it is desirable (as I trust you will agree in thinking) to maintain as an assurance to all parties that there will be no withdrawal of those securities for liberty and equal treatment which your State has always professed itself ready to afford. I would, however, refer more specifically to the 19th Article of the draft, in which it is proposed that in consideration of the discontinuance of all direct interference by this country in the government and control of the natives within the Transvaal, it should be formally declared that your Government will adopt and carry out the assurances which, with their assent and approval, were given to those natives by Her Majesty's Commissioners.

I trust that I may soon hear from you that there is no obstacle to my informing Her Majesty's Government that the Draft Convention can be adopted.

I have, etc.,

DERBY.

A CONVENTION CONCLUDED BETWEEN HER MAJESTY THE QUEEN, &C., &C., AND THE SOUTH AFRICAN REPUBLIC.

NOTE.—The words and paragraphs bracketed or printed in italics are proposed to be inserted, those within a black line are proposed to be omitted.