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[Page 20

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to these hills from the harbour beach connecting with the town-ship and from the scale upon which they are being constructed they would be eminently suitable for military purposes should fortifications be erected upon the hills.

There are no storage sheds at present for coals. The present German Admiralty Contractors being Messrs Hernsheim & Co., in the adjoining Harbour of Matupi,but it is understood that on the erection of the coaling wharf, I understand,is to run out from allotment No.10 on the plan & the land attached equals nearly 3 hectares affording ample space for almost unlimited coal storage, Lot 58 at the foot of the big jetty is also reserved by the Government, & I understand is to be covered with storage sheds & a tramway from and along the jetty will be erected.

Summed up, the position is quite consistent with the lavish spending of a Government grant to the N.D.L.to carry out what the local Germans assert is a fad of the Governor's for concentrating the white residents in one spot. The spot chosen for the purpose is at present the most unhealthy in the vicinity,although clearing & draining will in time remove much of the objection. The harbour is a fine one for the steamers of the N.D.L.but would be even finer from a naval standpoint, its mouth being fairly narrow & easy to mine and the hills surrounding it offering advantages very similar to those which proved so valuable in the defence at Port Arthur.

The reserves for slip may be so extensive merely because the land is so cheap,but is an ideal spot for dry docks. The wharves, while there is nothing at present to indicate other than peaceful uses, would afford every facility for coal stores & the storage of armaments, etc.,  required by merchant cruisers. In short under present conditions, it is a commercial port, but every natural condition & every work now being carried out there would be consistent with, & essential to, the ultimate establishment of a naval coaling & repairing base, but such an object would probably never be admitted until war was declared when it might possibly be found that large quantities of coal had been accumulated there. It is significant that at Matupi, where Hernsheim & Co., usually carry about 1000 to 1500 tons of coal for the German Admiralty, last year when the Morocco difficulty first commenced over 3000 tons

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