On December 1 a party of six New Zealanders arrives to begin an evaluation of the island as part of the British Pacific Islands Survey Expedition. Their purpose is to determine whether the lagoon is suitable for seaplane landings and to assess the practicality of constructing an airfield on the atoll. At least two aerial photographs of Gardner Island are taken from a Supermarine Walrus aircraft launched from the cruiser H.M.S Leander. The survey team focuses on taking soundings in the lagoon and mapping the island’s northwestern tip – the only land area big enough for a runway.

On December 20 Lands Commissioner Harry Maude returns aboard the Royal Colony Ship (RCS) Nimanoa, this time assisted by Cadet Officer Gerald Gallagher, to drop off the first colonists of the Phoenix Island Settlement Scheme (with the unfortunate acronym P.I.S.S.). Although the New Zealand survey party is on the island at this time, their presence is unrelated to the arrival of the first settlers. The Gilbertese work party, made up of six men from Onotoa and four from Arorae (both islands in the southern Gilberts), is put ashore to begin clearing land for the establishment of a village and coconut plantation. Maude is disappointed to see that a severe drought has turned the lush paradise he had seen in 1937 into a parched and hostile landscape.

On December 22 Maude and Gallagher depart to deposit other settlers on Hull and Sydney Islands to the east. Jack Kima Pedro, a half-Portuguese/half-Tokelau construction foreman, is left with the work party to operate two condensing plants for the distillation of drinking water.

On January 2, Maude and Gallagher return to Gardner to find the work party greatly distressed because well-digging attempts have failed to find drinkable water and one of the condensing units has burned out. Maude puts Mautake, Koata and Tutu ashore to help with the search for water.

On January 4, with no water yet found at Gardner, Maude and Gallagher once again depart to check on progress at the other islands, leaving the Gilbertese officials behind to help the ten-man work party in the desperate and wide-ranging search. There trek later becomes part of the island’s folklore, as does another story. Sometime in these early days (possibly during the great search for water) the workers are said to have come upon the bones of a woman and a man. They could tell that they were white people from the remnants of their clothing and from their shoes. No one knows what became of the bones but the area where tradition holds that they were found is the same region where Bevington noted ”signs of previous habitation” a year and a half earlier.

The week following Maude’s departure is marked by unusually high westerly ocean swells. Water levels measuring four feet above the already high spring tides pummel the island’s west-facing shorelines and may have overwashed some portions of the atoll.

Late in the month (the exact date is not certain) Maude checks in at Gardner on his way back to Tarawa in the Gilberts. ”A fair supply of well water” has at last been found and the Gilbertese officials rejoin RCS Nimanoa for the trip home. The original ten-man work party, however, is not happy. Five of the men consider the newly found well-water undrinkable and all are ready to abandon the project. Maude only succeeds in convincing them to stay on by promising to return soon with their wives.

On February 5 the New Zealand survey party departs having determined that the atoll is not a desirable base for aircraft operations.

On April 28 Maude returns with twelve new settlers for Gardner including the wives of the workers. He also brings materials for the construction of a 10,000 gallon cistern (which still stands). By this time rains have returned the island to its former bountiful appearance.

On April 30 a floatplane (probably a Grumman J2F Duck) is launched from the seaplane tender U.S.S. Pelican to take a mosaic of aerial mapping photos as part of a U.S. Navy survey of the Phoenix Islands.

On June 17 additional settlers arrive bringing the new colony’s population to a total of 58 (16 men, 16 women, 11 boys and 15 girls). During this period the island’s government is headed by Teng Koata who acts as supervisor and magistrate. Around this time, according to legend, his wife has an encounter with the goddess Manganibuka on a remote part of the island.

On November 28 the U.S.S. Bushnell arrives to begin an American survey of the atoll. The island’s shoreline is established by sighting from eight ”primary stations” (which include three eighty-foot steel towers erected along the northern shore) and fourteen ”secondary stations.” Extensive soundings are taken in the lagoon and surrounding ocean. Magnetic and tidal observations are also made. A population of eighty colonists is reported as living in ”about twenty grass houses.”

On December 5 the Bushnell’s survey is completed and the ship departs.