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remote period, cease to be of military importance. We are of opinion that in time of war, especially if any of the South American Powers should be hostile, British trade in the neighbourhood of South America will be much reduced.

123. Stanley Harbour has been examined, and we have Reports on the Third Report, pp. 407–418. measures necessary for its defence. We do not recommend any large expenditure upon the position, but if, as we have reason to believe, the harbour can be made secure at slight cost, its defence is well worthy of consideration.

Vancouver Island.

124. We have given the fullest consideration to the defence of Esquimalt, Third Report, pp. 419–456. in Vancouver Island, and have had the advantage of the opinion and counsel Digest, pp. 622-624. of Sir John Macdonald, the Prime Minister of Canada, when in this country

in July 1880.

125. The annual value of British trade in the Pacific Ocean is as First Report, paragraph 116. follows:-

1

In the China Sea

In the North Pacific

In the South Pacific

Homeward-bound trade from Australia

£

63,838,000

5,951,000

11,068,000

10,000,000

90,857,000

Of this vast total, not more than 1,000,000l. is contributed by the West

Coast of the Dominion of Canada.

126. The completion of the Panamá Canal, which may be looked for in Digest, p. 636. the course of a few years, will affect trade on both sides of the isthmus. In the Pacific commerce will undoubtedly increase, and will be drawn from other routes towards Panamá. But a fleet based upon Vancouver Island, 3,940 miles distant, would be powerless to protect the trade converging upon the Panamá Canal.

127. Esquimalt is the most remote and isolated of your Majesty's naval stations. Except Fanning Island the nearest British possessions are, Fiji, distant 5,100 miles, and Hong Kong, distant 5,700 miles; but no effective support could be given from these places, either to a squadron acting from Esquimalt, or to a garrison employed in its defence. The nearest of your Majesty's possessions on the route to Great Britain is the Falkland Islands, distant 7,400 miles, a distance so great that, in the opinion of Sir A. Cooper Digest, pp. 606, 607, 608, 611. Key, at least two intermediate coaling-stations would be required if com- munication is to be kept up in time of war. The Admiralty have more than

once had under consideration suggestions for occupying certain islands in Third Report, pp. 461-476. the Pacific off the coast of America. To such a course, however, there are grave objections. The islands belong to independent Powers, and even if they could be obtained by negotiation, it is almost certain that their occupation would lead to serious difficulties with the United States.

128. The United States is the only maritime Power which has the means of supporting a fleet on the western seaboard of North America. The Russian position, however, at Vladivostock must be taken into account, and the recent

extension of the French Protectorate over the Leeward group of the Society Digest, p. 611.

Islands, to some of which our attention was called on account of the excellence of their harbours, should be noted. The danger to be appre- hended practically resolves itself into-

(a.) Attack by the United States.

(b.) Attack by Russia.

129. (a.) About 700 miles from Esquimalt is the naval arsenal and fortified harbour of San Francisco, in direct railway communication with the

Atlantic States of the Union. In addition to this, at a distance of only 15 miles Third Report, pp. 433, 434. from Esquimalt, is Port Angelos, which has been selected as a naval station,

and will shortly be connected by railway with Puget Sound and San Francisco.

The time, therefore, is not far distant when it will be possible for the United

States suddenly to concentrate her resources upon British Columbia. The Digest, pp. 622, 628. Canadian Pacific Railway, even when complete, will afford no means of coun- teracting such a movement, for being connected with the American lines of railway, and, being in places within a short distance of the frontier, it

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