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A few of these schools are now being established, and it is hoped the number will be ultimately increased so as to provide; for every district, and so enable all children to have; the; opportunity of getting education beyond the standard they are now limited to in their village; schools. Health op Natives. On my arrival in Samoa during March of last year there was,an epidemic of dysentery, which extended throughout Western Samoa and continued for several months. Many deaths resulted therefrom, particularly among young children. This afforded an opportunity to make an object-lesson for the Natives in the matter of sanitation, which many villages .took steps to improve ; but the sanitation is still bad. It is the first and most important problem in Samoa, and will remain so until a thorough education is given in all schools on this subject, and makes its influence felt in the villages and home-life of the Natives. Another serious drawback to the increase of the Samoan race is the large number of deaths of infants due to improper feeding. These vital matters are receiving the attention of the Chief Medical Officer (vide his report herewith). It is satisfactory to note that, in spite of the large number of what may be; termed preventible deaths, the race has increased by 303 during the past year. lam hopeful of a greater increase in future, owing to the fact that Natives are undoubtedly realizing more and more the value of sanitation and medical treatment in preference; to their fa'a Samoa or ancient Native customs of treating sickness. They have cheerfully agreed to pay £1 per annum as a medical tax in order that their medical service may be a national one, and that all may receive treatment if required for any kind, of disability free of any further charge. A vast amount of good has been done by the Medical Department in treating thousands of Natives for hook-worm and yaws, and thereby effecting a great improvement on the health of the people. All these activities of the Medical Department could not be carried out were, it not for the; liberal subsidy granted by New Zealand, and which I trust will be continued in the interests of a splendid race of people, and so materially aid in a gradual and progressive increase in their numbers. Expenditure on Natives. It will be seen from the departmental report, under the heading, "Finance," that an endeavour has been made; to comply with the request of the Council of the League to show separately the revenue derived directly from the Natives and the amounts expended directly on them. These figures are only approximate, and those referring to expenditure do not include the moneys spent on the Medical and Education Departments, which are maintained almost exclusively for the benefit of the indigenous population. 111. CHINESE LABOUR. The reasons for employing Chinese labour in Samoa are well known. If Samoa is to progress it must supply its quota of tropical products to the world's markets. This it cannot now do with its comparatively small Native; population alone, and before we can dispense with imported labour we must hopefully await the time when the Samoan race has increased in numbers sufficiently to enable them to cultivate their own lands, and to furnish the necessary labour for those limited areas which are now (and which may be extended in future) cultivated by private enterprise. During the past year I assembled the employers of Chinese; labour and discussed with them the means whereby we could, in accordance with the; wishes of the New Zealand Government, place; the Chinese labourers on a better footing than the then-existing indenture system. I was impressed by the fair-minded spirit with which the employers dealt with this question, and their desire to be as generous as they could afford to be towards the labourer. As a result of our deliberations the indenture system was abolished and free labour instituted, whereby any labourer dissatisfied with his employment may give notice to terminate his services and be free to obtain other employment. The wages were increased, with provision for a minimum wage; of 3s. per diem for plantation workers. An Ordinance was enacted providing for the now conditions, and became law on the 4th December, 1923. Favourable reports have been received from employers and employees re the now conditions, which are; apparently giving greater satisfaction to both parties, and better economic results. During the past year 353 labourers have been repatriated to China —from whom many applications have been received to return here for another term of three years. It is our desire, to reduce the number of Chinese labourers in Samoa to the lowest possible number, and to replace them by Native labour where possible. This is being done successfully to a limited extent on some plantations, and will, I trust, be carried out still further as opportunities arise. Native labour for certain classes of work is very efficient, and does not cost more than Chinese. Some years previous to 1914 there were nearly 5,000 Chinese and Melanesian labourers in Samoa. In 1914 the number of Chinese was 2,184, and Me;lanesians 900 : total, 3,084. At the present time them; are only 938 Chinese labourers under agreement, 29 free Chinese, and 172 Melan,esians in Samoa. With scientific distribution of labour and esxpert supervision it is considered that the present areas of privately owned or leased plantations under cultivation can be properly maintained with a total of approximately 1,000 imported labourers, supplemented by Native labour whe;re possible, so that the so-called " Chinese labour problem " in Samoa should be less difficult to deal with in future; years than it has been in the past. IV. LEGISLATIVE COUNCIL. The first election of members to represent the European population of Samoa on the Legislative Council was held on the 23rd January, when the following gentlemen were elected, in the order given : 0. F. Nelson, Esq., G, E, W. L. Westbrook, Esq., A. Williams, Esq.