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 utilising certain vessels of the Union Steamship Company as auxiliary cruisers for local defence. 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 Roto mahana, the Tarawera, the. Waihora, the Hauroto, and the Rotorua can easily, by addi tional bulkheads or watertight subdivisions, be rendered capable of complying with the con ditions as to flotation necessary to qualify them for use as armed cruisers. Coal-bunkers can also be arranged in them so as to provide pro tection 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 Ship ping 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 con stitute 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 every thing necessary 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 ap peared imminent. I suggest also that arrange ments be made with the Union Steamship Company for fitting the vessels I have named with the additional bulkheads necessary to give them the reauisite degree of flotation and

other fitments for war vessels. 