A.—6

of the Native population. Southern Rhodesia entered upon its career as a self-governing colony just as the last Imperial Conference was beginning. Since then it has made very marked progress, its revenue and its trade have expanded, and its population is showing as healthy and satisfactory an increase as its limited total would justify. One of the most important questions which has latterly been engaging the attention of the Southern Rhodesian Government is that of the control of the Rhodesian railway system, a matter which affects not only Southern Rhodesia, but Northern Rhodesia and the Bechuanaland Protectorate. I will not go into the details of the difficulties surrounding that problem ; all I need say is that after prolonged discussion this summer a complete understanding was reached between the Southern Rhodesian Ministers and the Directors of the British South Africa Co., an arrangement which, in Sir Charles Coghlan's opinion, not only offers a fair and equitable settlement of the question, but should assist in promoting the prosperity and development of the countries concerned. So far as the Bechuanaland Protectorate is concerned, I have had much pleasure in approving the scheme on the assumption that it will be approved by the Legislatures of Southern Rhodesia and Northern Rhodesia. Ceylon. From Africa I might now go eastwards. Ceylon has had a new constitution since 1920, a constitution further amended in 1923, under which the unofficial element in the Legislature now has a majority. That constitution has worked smoothly, and under it both the general administration and the economic progress of the colony are going on most satisfactorily. The total value of the exports from Ceylon in 1925 exceeded £31,000,000, as compared with £22,000,000 in 1923. Tea, rubber, coconuts, and all staple products are in a flourishing condition. The railway system is being extended. Work has been begun on a large hydro-electric scheme which will provide adequate power for industrial development; and I might add, on the intellectual side, that the conversion of the Ceylon University College into a fidl fledged university is receiving active consideration. Straits Settlements and Malay States. The Federated Malay States and Singapore are not the least interesting portion of the British Empire. There you have an instance of what I might call indirect government maintained to its fullest extent. These States are still administered, though with the help of British officials, under the authority and control of the native Sultans, and the manner in which they have been brought into the British Empire, conserving their rights and their traditional dignities, has undoubtedly played a great part in that intense loyalty to the British connection which has throughout animated the rulers and peoples of these States. They gave to the British Navy before the war a very generous contribution in the shape of H.M.S. " Malaya." The Prime Minister told you the other day of the generosity with which they have offered to assist and accelerate the establishment of the Naval Base at Singapore. Without detracting in the least from the splendid spirit of that offer, I think one can almost say to-day that Malaya itself is already so important and so wealthy a part of the British Empire that its defence is a matter of great interest to itself as well as to the rest of the Empire. It is intrinsically deserving of defence, besides being a place from which the trade and traffic of the Empire can be protected. With regard to the general prosperity of Malaya, that has been remarkable. Its exports increased from £78,000,000 in 1923 to £150,000,000 in 1925—in fact, its exports are the largest in the world per head of population. That has been in no small measure due to the fact that Malaya is one of the world's largest producers of rubber and of tin. , Restriction of Rubber Exports. , I do not think a review of affairs in Ceylon or Malaya would be complete if I did not. mention, at any rate briefly, the policy of restriction of rubber exports frofn these territories, which was initiated on the advice of the late Lord Stevenson four years ago. The industry in those two colonies had fallen into a situation so serious that the whole production was being carried on at a loss, and there was grave danger of a great proportion of the plantations becoming derelict. That would have been disastrous to Malaya, and certainly would not have been good for the rubber consumers of the world, because it would have led to a serious shortage afterwards. The difficulty was met by imposing a system of restriction of output varying with the price ; this scheme has, I think, in spite of considerable fluctuations in price, assisted stability and has, at any rate, saved the industry from the complete disaster which at one moment faced it. That restriction is being maintained under a somewhat modified system, and, I believe, although very much criticized at one time in various quarters, is now being gradually recognized, not only by producers, but by consumers, as being a useful feature in the stabilizing of the price ; stability, after all, is far more important for productive industry than wide fluctuations which cannot be foreseen and with which industry cannot cope. I may say that the development in Malaya will be greatly assisted by the great hydro-electric power scheme which is being inaugurated in Perak. It is perhaps also worth mentioning that the Malayan Governments and the local communities have taken advantage of this period of prosperity to show not only their Imperial patriotism, but their wisdom in the endowment of research both by establishing and enlarging a special rubber research institute and by setting up a special scheme of fishery research. Hong Kong. From Malaya I pass to Hong Kong, one of the most remarkable examples of what British colonization has meant in the last two generations. We took it over as a barren rock some seventy years ago. It is, or was until a few months ago, the largest in-and-out shipping port in the world, and had. built up an immense trade. Its prosperity at the beginning of last year was unexampled. Then there came a sudden check arising from those anti-foreign troubles which swept in varying

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