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ment, and has at various times carried a large quantity of cargo for other departments, more especially the Railway and Defence Departments. She also made one trip round the North Island lighthouses when the " Stella " was under repair. Her boilers being nearly worn out, materials for the construction of two cylindrical boilers with corrugated furnaces were imported from England. The plates are the best quality boiler-steel. A contract has been let to Messrs. W. Cable and Co. to make these boilers, at a cost of £858. The " Stella, , ' except when laid up for repairs, has been regularly employed in attending to lighthouses, buoys, &c, and has also carried out the quarterly mail service to the West Coast bays and sounds. She also made a trip to the Antipodes and Bounty Islands in March last. It was found that the provision depot that had been erected at the Bounty Islands had been carried away —probably by a very heavy sea, and only a few fragments of it were found ; owing to the inaccessibility of these islands, or rather rocks, and the impossibility of existing on them, it was determined not to re-establish the depot. The new boiler referred to in last report as having been contracted to be made by Messrs. Luke and Sons was satisfactorily completed by that firm, and a contract was subsequently let to Messrs. Cable and Co. to place the boiler in position and to execute sundry other repairs, &c, including a new donkey-boiler, new pistons fitted with Buckley's patent springs, cylinders re-bored, new bearings where required, new deck, &c. This contract was completed at the end of December. The new boiler is slightly larger than the old one, and is worked at a pressure of 801b. to the square inch. The increased pressure has resulted in a considerable saving of fuel, the same number of revolutions being obtained with a decreased consumption of coal, fully lcwt. less per hour being burnt. During the nine months and a half the " Stella " was running she steamed 16,340 miles, was 2,161 hours under steam, burnt 620 tons coal (nearly all native coal), landed 844 tons cargo, and carried 327 passengers. The schooner " Kekeno " was unfortunately wrecked at the Bluff on the 24th September last, and recommended by the Surveyors, Captains Tyson and Pengelly, to be sold. The wreck was, by your direction, handed over to the Bluff Naval Volunteers conditionally on their getting her off the rocks and repairing her, and holding her at service of Government on special occasions, and the vessel is now in their possession. The " Kekeno " had, prior to her wreck, made her usual trips to the Auckland and Campbell Islands in connection with the protection of the seal fisheries. Examination of Masters, Mates, and Engineers. —One hundred and fifty-two candidates passed their examination for certificates of competency, and 37 failed. Of those who passed, 107 were masters, mates, and engineers of sea-going vessels, and 45 masters and engineers of river steamers. Three candidates failed to pass the colour test. To one of these a certificate was issued with this fact noted on the face, this being provided by the regulations in cases where a candidate already held a certificate ; no certificates were issued to the others. Two candidates were reported to have been examined and passed in the colour test only. Only six new certificates of service were issued during the year, two being for the foreign trade, three for the home trade, and one as engineer. Belief of Distressed Seamen. —During the past year the sum of £22 3s. 6d. has been paid to the Board of Trade in respect of the expenses in connection with the relief of the crew of the " Eansom," wrecked at the Marshall Group on the 4th July, 1885, and £10 4s. 3d. in respect of the crew of the " Mazeppa," wrecked at the Caroline Group on the 13th July in the same year. A sum of £49 ss. 6d. has also been paid in the colonies in respect of the relief of the crew of the " Rapido," wrecked in Cambridge Gulf on the Ist October, 1886 : a further claim for £136 has been received, but payment thereof has been resisted, on the ground that the charges for passages are in excess of the scale authorised by the Board of Trade. In connection with the relief of the crew of the " Eapido," it appears to me that, in case of colonial vessels wrecked in the colonies, it would be sufficient if the relief of the crew terminated on arrival at one of the principal ports of any of the colonies, and that it is not necessary that they should be sent back to the colony to which the vessel belongs. It may often occur that the men really belong to or have been shipped in another colony. Wages and Effects of Deceased Seamen. —During the year the estates of 56 deceased seamen have been dealt with. £185 2s. lid. has been paid to relatives or creditors, and £200 9s. 3d. has been transferred to the Public Trustee, who was dealing with other property belonging to the estates. Survey of Steamers and Inspection of Machinery. —Certificates of survey under " The Shipping and Seamen's x\ct, 1877," have been issued to 185 steamers, of 30,649 aggregate tonnage and 10,059 horse-power, being two steamers less than were surveyed last year, but an increase in the tonnage of 970 tons, and 157 in the horse-power. One hundred and forty-eight certificates were issued to sea-going and the same number to river steamers. As anticipated in last year's report, the Board of Trade have recognised certificates of survey issued by this department to steamers trading between this colony and the United Kingdom and intermediate ports. This was done by Her Majesty's Order in Council of the 26th November last, which, with the accompanying despatch, was published in the New Zealand Gazette of the 3rd March last. This is a high testimony of, and speaks well for, the standard of the surveys made by the officers of this department. The annual reports of the Inspectors of Machinery are attached hereto. In December last Mr. J. Nancarrow, Chief Inspector of Machinery—a valued officer of the department —who was the first engineer surveyor appointed under the old Steam Navigation Act, retired on a pension. It has not been found necessary as yet to appoint a new Chief Inspector but an additional Inspector (Mr. W. M. Mowatt) was appointed, after applications had been publicly invited for the appointment. The surveys of steamers, hitherto done by Mr. Nancarrow, have been done by the local inspectors, assisted, when necessary; by a temporary transfer of an inspector from another place. At present there is one inspector stationed in Auckland, two in Wellington, one in Christchurch, and two in Dunedin. The districts of Nelson South (West Coast) and Westland have been detached from Christchurch,