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regarded it in this light; and yet I am bound to say that if the extremely lugubrious picture which the Honourable Member has painted of the condition and prospects of the Colony were a correct one, there would be at least ground for arguing the exist ence of the condition which would justify-I will not say repudiation--but breach of a legal contract, viz.: inability to pay other equally binding obligations in full. I am sure that the Honourable Member had no intention of this kind; and I gather that his object was simply to show our inability to pay these increased salaries in permanence in the absence of additional taxation. But whatever may have been the Honourable Member's intention, the effect likely to be created by his speech if unanswered, is far beyond this; and as I regard injury to the credit of the Colony as likely to inflict greater loss upon the Colonists than that involved in these increased salaries, even when coupled with the increased Military Contribution, I have deemed it my duty to examine this subject calmly and deliberately in all its various bearings with a view to determine whether the picture of our position as drawn by the Honourable Member is a correct one, and I must now make a short further trespass upon your time in the endeavour to present to you the result of that examination.

In approaching the subject of the Honourable Member's speech, I am bound to bear testimony to its ability, and to admit that the painstaking research of which it bears evidence, has brought forward facts well worthy of reflective con- sideration; but on the other hand as the result of my examination of the question I find it impossible to regard it otherwise than as the address of an advocate which, to say the least, makes the most of the facts adduced in favour of his view, and entirely ignores all those which tell in favour of the other side. In order to heighten the effect of the gloomy picture which (whatever his motive) it has pleased him to draw, he has instituted a contrast between the present, (as he would seem to allege) abject, position of the Colony, with that portrayed by my so-called "brilliant" despatch of October 1889, and he unmistakeably conveys the inference, though he does not actually say so, that the description there given was incor- rect. In one passage if correctly reported he alleges himself to be almost quoting my very words when he says that I referred to a vast commerce "in a healthy state of progress with prosperity extraordinary and prospects magnificent." Now any one hearing or reading these words "prospects magnificent" (which by-the-bye I never used) as contrasted with his subsequent representation of the depressed condition of the Colony, would infer that I had dealt largely in prophecy as regards the immediate future, and that such prophecy had been falsified by the event, whereas this is not only not true but in one important respect the exact opposite of the truth. I indeed referred to a trade as apparently in a healthy condition of progress, despite the restrictive measures against Chinese in the United States and Australia, and the decline of the Tea Trade the full effects of which I mentioned as having not then been fully felt-and this reference I shall presently give reasons for believing correct-while I expressed no doubt that land would in the course of time become more valuable than it was then, and this I have still stronger reason to believe now. But, with reference to the immediate future I most distinctly expressed doubts whether speculation had not unduly raised the prices both of shares and of land, and plainly intimated the possibility of reaction and consequent distress to all those who had been speculating beyond their means. So far from partaking largely in prophecy whether about the immediate or distant future, my despatch dealt almost exclusively with facts, not one of which in so far as I know has ever been impugned; and the only passage other than those referred to in which the future was touched upon at all was the following:-" As far as is known all, or nearly all, of these Companies especially those whose field of operations is Hongkong, have good, some of them excellent, prospects of success." And even here I am not expressing my own opinion, but (as is shewn from the words "as far as is known") the opinion of the community, and that I was entitled to infer from the prices of the shares and the fact that no note of warning had anywhere been sounded. It is true that I expressed no

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