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of ships when the Defence Scheme is in operation will be the same that is made of them in ordinary peace time, viz., the giving of information to the public and the harbour authorities of the arrival of vessels whether mercantile or naval. It could scarcely be construed into an abuse of the lighthouses' neutrality.

6. In paragraph 6 of his letter the G.O.C. gives his reasons for departing from the examina- tion line across the main western entrance recommended in paragraph 25 of the Colonial Defence Committee's Remarks No. 340 R.

7. On the question raised in paragraph 7 of Major-General Hatton's letter as to the advisa- bility, in the interests of trade, of closing the western entrance to the harbour of Hong Kong to ocean-going trade in time of war, I thought it well to ascertain confidentially the opinion of the leading British Shipping Agents of the Colony. I annex a copy of a letter on the subject from Mr. E. A. Hewett, Chairman of the Committee of the Local Chamber of Commerce and Agent of the Peninsular and Oriental Steam-ship Company at Hong Kong. It certainly does not support the view of the Local Defence Committee that the blocking of the western entrance at the outset of war would in no way impede or hamper trade, and I do not therefore propose that any alteration should be made in the provision in the Scheme that the minefields should not be laid down until the consent of the Naval Commander-in-Chief or Senior Naval Officer has been obtained; nor do I propose that the arrangements for regulating traffic should include a prohibi- tion to ocean-going steamers to use the western entrance.

8. I annex a copy of a letter which I have addressed to the Naval Commander-in-Chief on the subject of the torpedo attack dealt with in the 7th paragraph of the Colonial Defence Com- mittee's Remarks No. 340 R, and in the 8th paragraph of Major-General Hatton's communication

to me.

9. With regard to the 9th paragraph of that communication and the 5th paragraph of the Colonial Defence Committee's Remarks No. 347 R, dealing with the provision of a refuge for women and children, it seems to me likely that in the event of a war with a maritime Power many would have left the Colony for Macao, Canton, or elsewhere, before it came to a case of Hong Kong being blockaded and liable to bombardment. A general rising of the Chinese, which is the other contingency in which the European women and children would require protection, is one which is not likely to arise in view of the large proportion of the wealth of the Colony that is in the hands of Chinamen, whose interests are thus enlisted on the side of law and order.

10. The 10th paragraph of the G.O.C.'s letter refers to the rapidly increasing numbers of Chinese in the Island in connection with such a rising. If it did occur, all business in the Island would be suspended, and every European available to suppress it. The more of them that are accustomed to the use of arms and that can be enrolled into a military body on an emergency, the more promptly could a serious rising be got under. The steps that are being taken to increase the strength of the Volunteers, and to form from British subjects between the ages of 35 and 50 a Volunteer Reserve Association, to be trained in musketry and to be enrolled as a Volunteer Reserve Company in time of emergency, will assist in this direction.

Shortness of water supply is not likely to be specially felt in time of war, when there would be a diminution rather than an increase of the Chinese population. The Colonial Government is, as you are aware, carrying out large projects for the increase of the supply at all times.

11. My letter to the G.O.C. of the 31st August, and his to me of the 3rd instant, sufficiently explain the points of the Scheme with which they deal. I will consider how far the Civil Government can meet the wishes of the General in the matter of supplying a censor and staff.

12. With regard to the Scheme itself, I would draw attention to the care and completeness with which the military parts (Chapters I-V) have been brought up to date and revised in accordance with the Remarks of the Colonial Defence Committee by the Major-General Commanding. The "Action by the Civil Authorities," embodied in Chapter VI, is capable of some improvement, which will be made in the next, but for which I have not thought it desirable to delay the submission of the present revision. It will be necessary to detail in it the assistance that the Naval Authorities are asking should be given by the Civil Government towards making provision for 1.000 wounded British officers and sailors that might, in certain circumstances, be landed at Hong Kong from the fleet.

13. If I may be permitted to point out what appears to me to be a faulty matter in the arrangement of this as well as of other Colonial Defence Schemes, I would suggest that "Com- munications by road, &c." (Chapter II (C) (i) ), is ill placed where it now stands, coming in the middle of the Defence Organization to which Chapter II is devoted. It would seem better that it should come in Chapter I, which deals with the permanent military conditions on which the Scheme is based, and that it should follow the description of the Colony which in most Schemes comes after the statement of the Colony's position and consequent liability to attack.

I have, &c. (Signed) M. NATHAN, Governor.

The Right Honourable Alfred Lyttelton, K.C.M.G.,

&c.,

&c.,

&c.

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