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necessity of a licence, with its accompanying photograph, is imposed only on the headman in charge of each boat; the restricted requirement being, it is believed, quite sufficient to fix responsibility in respect of irregularities such as had originally given occasion for the regulations.

56. One of the fortunate events of the year 1888 was the settlement with the Chinese Government of the long pending and much vexed question of the provision of a site for a lighthouse, in connection with the southern approach to Hongkong. The only suitable sites are on one or other of certain rocky islets belonging to China situate some 28 miles from the Colony; and among the various difficulties which have obstructed the settlement of this question, the principal one was the objection of the Chinese Government to cede, or even lease, to a foreign Government the smallest portion of its territory. As the discussion of this subject had been dragging on for many years past and the matter appeared to be of sufficient im- portance to justify urgent measures and very liberal terms, I caused to be conveyed to the Chinese Government various distinct proposals under any one of which the Dominion of China would remain unimpaired and the control of its Government, ordinarily nominal, might at their option be completely secured, while the whole cost of construction would fall on the Colony.

57. With the valuable and most necessary co-operation of Sir ROBERT HART, the Inspector General of Chinese Maritime Customs, Her Majesty's Minister at Peking was able to secure the consent of the Tsungli Yamên to a settlement which though differing somewhat from all the proposals made, accepted their main principle; and the work is now in progress, conducted by the Works Department, and at the sole cost of this Government.

58. As the hope of assistance from the Lighthouse Department of the Chinese Maritime Customs has failed, it has been necessary to purchase a steam vessel of considerable tonnage, specially for this service. The work has also been delayed by an extremely unfavourable season; for landing can be effected at the Gap Rock (on which the Lighthouse is to be built) only in very calm weather, which has during the last year been of rare occurrence. While further difficulty has arisen from the fears on the part of the contractors and workmen that they, on this isolated rock, will become the object of attack from the pirates, who unfortunately still abound in these seas, and whose presence in the neighbourhood may probably render necessary either a guard for the Lighthouse keeper or cable communication with the rock, as soon as the Light is in operation.

59. Owing to these various causes, I expect that both the construction and maintenance of the Lighthouse will cost more than was at first anticipated; but even if the expense should be considerably greater, there can be no doubt that the object would be fully worth it. Considering that vessels of an aggregate burthen of fully 2 millions of tons annually reach Hongkong from the South, and that all those which arrive on dark nights or in obscure weather are subject to delay and danger (sometimes for many hours) which would be for the most part pre- cluded by this Lighthouse with its warning fog horn, it may readily be estimated how enormously valuable will be this work to the trade of the Colony. Indeed it is a matter for surprise that more vigorous efforts were not long ago made to secure so great a benefit.

60. A serious outbreak on the part of convicts employed on works in gangs outside the Gaol took place in the month of September, 1888, and resulted in the death of a valuable officer besides that of two of the prisoners, killed while violently resisting recapture. My serious attention having thus been attracted to this subject, I found that similar events had occurred not unfrequently in the past, and I became satisfied that without an utterly disproportionate expense for guards, they were not likely to be prevented in the future; so many are the chances of escape offered by the situation of the island, and increased, as there is every reason to believe, by the powerful secret societies of China, which devote themselves to the assistance of criminals in confinement. A report from the Surveyor General, strongly deprecat- ing the use of convict labour on public works under ordinary circumstances, strengthened the doubt which I had previously entertained as to its economical value in a Colony where free labour is so cheap; and completely satisfied me that with any additional expense for guards it would mean actual loss. Being moreover convinced both by medical opinion and from the results of experience, that the working of the convicts outside was not at all necessary to their health, I, under all the circumstances, determined that they should for the future be confined to the precincts of the Gaol, and I am glad to say that, in the ten months which have since elapsed, there has been no cause whatever to regret the decision.