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it may be the best course to take the vessels stationed there during peace to some d's- tance, it does not seem impossible to arrive at an understanding by which these different views might practically be reconciled.

11. It is estimated that the annual sum required to refund the capital, spent in con struction in ten years and to pay three per cent. thereon meanwhile would be 73,8361. A payment by the Colonies of five per cent. by way of sinking fund and interest would produce 31,3001, It may also be observed that the cost of the annual maintenance and of the payment of five per cent. on the capital outlay would amount to little more than per head of the Australasian population, while the naval estimates of this country amount to about 7s. 6d. per head. It must at the same time be remembered that several of the Colonies maintain, and would continue to maintain, their own vessels for purely local defence.

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12. The views arrived at by the Admiralty, after consideration of Rear-Admiral 'Tryon's reports, are embodied in the instructions which were addressed to Rear-Admiral Fairfax on his being appointed to succeed to the command of the Australian Station, and which are printed and marked "M" in the Appendix. By these instructions Rear- Admiral Fairfax is directed, on receiving telegraphic orders to that effect, to prosecute the negotiations on the basis of the proposals put forward by the Colonies of New South Wales, Queensland, and Tasmania. It was not, however, intended that Rear-Admiral Fairfax should commence the negotiations until after discussion of the subject at the Colonial Conference.

1. In thus accepting the proposed payment of five per cent. for ten years by way of sinking fund and interest on the initial cost of the vessels, their Lordships point out that this constitutes a great financial concession. In the original scheme it was contemplated that the whole cost of construction and maintenance would be borne by the Colonies, and by the present scheme not only is the principle adopted of paying the capital cost from Imperial funds and receiving an annual payment from the Colonies, but the contribution which the Admiralty are ready to accept covers only about half the primary charge of construction and equipment.

14. A modification is suggested in the Admiralty instructions in the number and character of the vessels to be constructed. The vessels now recommended are:---

2 Improved cruizers, 204 knot vessels.

2" Archers."

2 "Rattlesnakes."

This alteration involves an addition to the capital cost of about 50,0007., and a corresponding increase in the annual per-centage. Their Lordships finally observe that, should these negotiations be brought to a satisfactory conclusion, Her Majesty's Govern- ment will, on the earliest opportunity, lay the proposals before Parliament, and press for their acceptance.

15. I trust that the Conference will give its earnest attention to the consideration of this important subject, and that the result of our deliberations may be that those Colonies which have not hitherto seen their way to adopt the proposals laid before them may be wiliing on this occasion, by a free interchange of opinion and discussion, to unite with the Mother Country in a scheine which will secure the efficient protection of the coasts and commerce of Australasia.

Colonial Office, March 1887.

H. T. HOLLAND.

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APPENDICES to No. 62.

"A."

[Enclosure in Rear-Admiral TRYON's letter to the GOVERNOR OF VICTORIA, dated

27th March 1885.]

MEMORANDUM.

CONSIDERATIONS of defence naturally involve an estimate of what they are to be prepared against.

History is apt to repeat itself; squadrons and fleets have escaped the most vigilant Adinirals, and the most skilful strategists failed in days of old so to order our fleets as to prevent this. Since those days the composition of the navies of the world has greatly altered, and at this time it is far casier for an Admiral to avoid notice and conceal destina- tion.

It is possible that an attack may be delivered by a small squadron of ironclads of a type that does not entitle them to a place in the first rank-they would be very formidable if employed to attack our Colonies; and still more possibly a hostile squadron might contain vessels of the fast partially-armoured class that are now much in fashion, and the construction of them is on the increase. It is well to consider what such a squadron could do, supposing it had arrived off our coast, having avoided detection, the Âdmiral in command, deceived by false reports, gone to New Zealand, with the telegraphs cut.

If there is a determination to resist such a squadron, even should it force a channel or the line of defence, unless it is accompanied by a considerable land force, cannot do much against a large population, if there is a resolute determination to resist at all costs.

It could effect a certain amount of harm by bombardment, but to such towns as Melbourne and Sydney the injury would not be very great, even if the fleet expended all its ammunition. The more lasting effect would be the destruction of trade, and with it the recuperative power of the country, for years. If in lieu of resistance there was hesitation, followed by a decision to yield-a condition I hardly can contemplate-trade and commerce will be equally destroyed, and if there is one thing more certain than another it is, that demands, yielded to, would have a more disastrous effect on the welfare of the country than ever could be produced by the heaviest bombardment.

History is replete with instances of the successful resistances that can be improvised by large towns against even a very considerable force.

The destruction of trade and commerce, and with it the infliction of long and lasting injury, could be also effected by an enemy who sent fast cruisers off our poris to capture our vessels.

To render an attack from the first named futile, and, if possible, to render the task so improbable of success that no one would contemplate the undertaking, a local defence is called into existence; but while it is not very costly to protect our homes with the aid of local forces, they do not, and they could not help to drive off cruisers such as could prey upon us.

We must therefore provide the means whereby they may be captured, if possible; if not, at all events, driven off our own coasts.

It seems to me that if our local defences are in a satisfactory condition a heavy squadron would have no mission in these waters. The cost would be great, the maintenance difficult, and in time it would be overtaken.

From the above it appears that two forces are required, each with its special mission, but each aiding the other. The duty of the first is to defy attack, and to welcome the coming friend, and to afford him a safe harbour; the latter to chase and capture the enemy on the wide sea, or, if driven home by superior force, to join in the defence. It appears to me that the local defence forces-I include in this term the naval and military force, the forts, mines, and torpedoes, in fact everything—at Melbourne are designed to comply with one condition, viz., to furnish local defence.

Each harbour has special conditions attached to it. Some may be defended by forts and mines only; in some cases torpedo boats must be added, and in other cases, such as

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