outlay should now be incurred in the direction of providing more torpedo-vessels. Nor—though I should be glad to see a man-of-war provided as a nucleus for other naval forces—can I advise that the recommendations made by some of my naval friends for the purchase and maintenance by the colony of a considerable number of war-cruisers, gun-vessels, and torpedo-boats should be acted on. In the distant future New Zealand may become—I venture to foretell she will become—a considerable Naval Power; but meanwhile she must be content with what her present resources will enable her to accomplish. The most practical suggestion that I can now make with regard to the provision by the colony of vessels of war is to make arrangements for utilizing certain vessels of the Union Steamship Company as auxiliary cruisers for local defence. Vessels to be used as auxiliary war-cruisers. More than a year ago I wrote to the authorities in England to consult them on this subject, and I find that five of these ships, viz., the “Rotomahana,” the “Tarawera,” the “Waihora,” the “Hauroto,” and the “Rotorua” can easily, by additional bulkheads or water-tight subdivisions, be rendered capable of complying with the conditions as to flotation necessary to qualify them for use as armed cruisers. Coal-bunkers can also be arranged in them so as to provide protection to the machinery against shot and shell-fire, it having been found by experiment that coal will afford a measure of such protection. In like manner the “Aorangi,” “Ruapehu,” and “Tongariro,” belonging to the New Zealand Shipping Company, and two ships of the Shaw, Savill, and Albion Company would be available as armed cruisers. The diagram before you shows a vessel somewhat of the character of the five last-mentioned, fitted with armament, coal protection, and other details necessary to constitute her a war-cruiser. The ships of the Union Steamship Company would be similarly treated, on a scale suitable to their dimensions. Probably, in case of war, the armaments, stores, and fitments required for the direct steamship lines would be put on board in England. As regards the vessels of the Union Steamship Company, however, I would recommend that everything necessary to be placed in them in order to constitute them auxiliary cruisers, including armament of breach-loading guns and machine guns, should be kept in store at one of the principal ports of New Zealand, ready to be put on board whenever war appeared imminent. I suggest also that arrangements be made with the Union Steamship Company for fitting the vessels I have named with the additional bulkheads necessary to give them the requisite degree of flotation and other fitments for war-vessels.