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The population, which was shown by the census of 1881 to be 160,402, is now estimated at not less than 215,000.

11. It is evident that the prosperity, I may almost say the existence, of the Colony, and the welfare of this large population, depend upon the continuance and security of its trade with other places. If the trade is secure, the prosperity may be expected to continue and increase, and the first instincts of self-interest would lead the community to make every effort to protect and defend their trade,

12. The present defences of Hong Kong, with their powerful armament, will suffice, in the opinion of Her Majesty's professional advisers, to afford the necessary protection against any attack likely to be made upon it; but I need scarcely remind you that another and more powerful safeguard is provided by the ships of Her Majesty's navy, whose duty would be to prevent any hostile force from approaching the place, and in whose absence alone would any attack upon it become possible. The combination of the two forms of defence will, it may be hoped, effectually secure the safety of the trade of the Colony, and of the population which lives and thrives upon it.

13. I frankly recognise that the merchants of the Colony have always been ready to acknowledge the value of the navy to them. At the same time the changed conditions of warfare, and the sudden and rapid nature of the opening operations, have made it necessary for Hong Kong, like other important Colonial ports, to be always ready to repel an attack in case of the absence of the fleet, and to have its garrison permanently at full strength, and not dependent upon the doubtful possibility of receiving reinforcements on the outbreak of war.

14. It will doubtless be urged, as has been urged before, that the defence of Colonial ports is a matter of Imperial concern, and that the maintenance of their garrisons should be mainly borne by the taxpayers of the United Kingdom. Her Majesty's Government have, however, never admitted, and cannot now admit, this plea. Self-preservation is the first law of nature, and if the capture of Hong Kong would be a serious blow to the Empire, the capture would mean ruin to many inhabitants of the Colony, and serious loss and hardship to all. Houg Kong, in common with every other British possession, is directly benefitted by its connexion with the rest of the Empire, and, while enjoying the benefits, cannot escape from the responsibilities, entailed by that connexion. The larger dependencies, such as the Australian Colonies, accept their responsibilities without demur, and not only provide the whole of their land defence, but contribute to the cost of the navy in order to strengthen the squadron, and obtain more complete protection for their shipping and floating trade.

15. The estimated cost of the navy to the Imperial Exchequer is, as you will see from the Statesman's Year Book (page 247), over 13,000,000l. for the year 1888-9, and as the population of the United Kingdom (page 255) is more than 37,000,000, these figures show that the mother country contributes 7s. per head of its population to the naval defence of the Empire, and it might reasonably expect its dependencies to make provision for their own defence to an equal amount. Questions of jurisdiction beyond the three-mile limit, of the flag, and of discipline, stand in the way of Colonial war ships, so that the navy will always be that of the mother country, and in dealing with the great question of the defence of the Empire it is difficult to lay down any other broad principle for dividing the cost of Colonial defence, except that of the mother country undertaking the sea defence of the Colonies by means of her navy, and of the Colonies, so far as their means allow, respectively providing for their own land defence. But even this principle admits of extension, as, for instance, when a Colony agrees to contribute, as most of the Australian Colonies now do, to the cost of additional ships to be employed in local waters for the protection of the floating trade within those

waters.

16. In some cases, as I need scarcely inform you, the poverty of the Colony renders any realisation of the general principle laid down in the preceding para- graph practically unattainable; in others, the contribution, though substantial, falls short of the full cost owing to the inability of the Colony to provide more; and in both cases the difference is borne by the heavily taxed mother country. The Army Estimates (page 245 of the Year Book) are considerably over 16,000,000, or more than 8s. 9d. per head of the population. And this, added to the naval charges, makes a payment by the mother country of 15s. 9d. per head per annum for the defence of the Empire in 1888-9. But I am informed by the Lords Commissioners of the Treasury that the corresponding payment for the

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