In laying out the different allotments, an intermediate space, equal to what was granted the settler, was retained between every two allotments, for the benefit of the crown; and as this set them at some distance from each other, and there being a wood between every two settlers, in which the natives might conceal themselves, if they were inclined to mischief, several musquets were distributed amongst the settlers, and they took possession of their allotments on the 18th of July, and began to erect their huts:  however, very few days elapsed before a large body of the natives appeared in the grounds of one of the new settlers at Prospect-Hill, who, alarmed at the sight of a number of natives, (by his account more than a hundred) fired off his musquet and retreated; this, of course, encouraged them, and they advanced, and set fire to his hut, which was nearly finished.—­On hearing the report of a musquet, another settler took up his arms, and running to the spot, fired on the natives, who retired to some distance.

As soon as this affair was known at Parramatta, a party of soldiers were detached, who, getting sight of about fifty of the natives, obliged them to disperse.

This circumstance induced Governor Phillip to deviate from the royal instructions, which pointed out in what manner the allotments of land were to be made; and as the only means of enabling the settlers to defend themselves against similar accidents, he granted all those intermediate lands which had been reserved for the use of the crown, to the settlers:  by this means, all the land would be cleared of timber, so that the natives could find no shelter, and, in all probability, there would be little danger from them in future:  however, a noncommissioned officer and three privates were detached to each settlement, with orders to remain there until the lands were cleared.

In making this arrangement, no additional ground was given to the settler, but their allotments were brought more into a square, and the ground not occupied at present, would be granted to others in future.  When these settlers were placed at such a distance from Parramatta, it was on account of the soil being good, and that their live stock and gardens might not be so liable to depredations as they would have been if nearer the town.

On the 1st of August, the Matilda transport anchored at Sydney, with cloathing, provisions, and two hundred and five male convicts.  She sailed from England on the 27th of the preceding March, in company with four others, and parted with them the first night.  Although this ship had made so good a passage, she buried twenty-four convicts; twenty were sick, and many were in so emaciated a state, that scarcely any labour could be expected from them for some months.  The Matilda had lost three days in endeavouring to get into St. Jago; she lay nine days at the Cape of Good Hope, and was two days at anchor on the Coast of New South Wales, within an island in the latitude of 42 deg. 15’ south, where the master found very good anchorage and shelter for five or six vessels.  This island, by the master’s account, lies twelve miles from the main.