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From some cause or other the Defence Force of this colony does not occupy that position which its work and importance to the colony entitles it to. Its members give their time, and in many instances their money, in the course of learning that profession which will alone serve the country in the hour of need, and they deserve the .greatest credit for doing so. As we all know, when war comes the military occupy the first place in the people's thoughts, and it does not seem equitable that in peace they should occupy the last, but for the most part this is the case. Men by becoming Volunteers put their loyalty into a practical form. They are the insurance against war risks for the country and for those who, for one reason or another, give no time to military training. The case of the officers holding commands, and staff officers under the Defence Department too, would appear one for special consideration. While Civil servants receive compensation, no length of service can qualify these officers for such, and the pay of their appointments is not so remunerative as to admit of their saving money. It must be also remembered that their positions are by no means insured, and many are merely holding temporary appointments. These officers have no opportunities to make money in business ; and considering the few there are, and the little expense it would consequently be to the country, it does not appear to be too much to suggest that a retiring-allowance according to scale should be granted them. The numbers of the Defence Forces of New Zealand are, as has been stated elsewhere, 13,934 of all ranks. This shows for the last twelve months a decrease of 1,457. Of this number eighty-five men are accounted for by the reduction of batteries of field artillery to three guns. Considering that the South African war came to an end over a year ago, this speaks well for the spirit of the Force. I find, generally speaking, an earnest desire evinced throughout the Defence Forces to adopt those means requisite for efficiency. There exists, however, some serious obstacles to this desirable end being attained, and of these I will refer here to two. One is the system of election of officers, and the other the difficulty in many instances of men being able to obtain leave from their employers. Regarding the first, lam not aware of any institution, civil or military, where this practice pertains, and I am aware that wherever in military life it has been tried it has been a complete failure. The system places both officers and men in a false position, and is utterly subversive of discipline. Through it, too, are lost to the colony the services of many men who would make excellent officers, but who naturally will not serve under such conditions. As regards the second disability I have mentioned, this is also a grave one, and unless some scheme to meet it can be formulated it will very seriously affect Volunteering in New Zealand; it is even doing so now. There would seem to be two alternatives to meet this case. Either the country must be prepared to remunerate the employer for the loss of the employee's services, or the Militia Act must be put in force for, say, a week annually. I fully appreciate the employers' arguments, but unless men are trained they cannot become efficient, and the country will find itself paying for an article of little value to it. When war comes the loss will far outweigh any inconveniences that might be occasioned now. A universal system of training has now been established. Officers and non-commissioned officers are required to qualify for their positions by becoming in each instance more proficient than the rank below them, and by so adopting that system on which alone any sound business can be created. But little attention has apparently been formerly paid to this, and corps have been too ready to rely solely on the services of Instructors. The visits of Officers commanding Districts, and those in authority, have been too few, and units have suffered in consequence. Revised Manuals of Instruction for mounted and dismounted corps have been issued. That for the latter has inaugurated the system of single rank, and assimilated the drill to that of the mounted branch. By this means the dismounted man who can ride will be able to at once take his place in the ranks of a mounted corps if required. The drill also is in itself rendered simpler. All ceremonial and unpractical work is abolished. The Volunteer Regulations have been rewritten. The terms for earning capitation have been revised, and rendered more suitable to the various avocations now followed. Concessions have been granted in those places where it was considered advisable. Formerly a considerable sum of money was voted by Parliament to be distributed in prizes for rifle shooting; this is now given for efficiency, and benefit will accrue. It has been considered that where corps are armed with small arms they should possess the most effective, and the carbines previously in possession have been withdrawn, rifles being substituted for them. The carbines have been issued to cadets who were previously armed with Sniders. Although improvement in discipline has been effected, much still requires to be done to enable me to report it as satisfactory. Unless a satisfactory discipline can be established in a corps, the question of its retention should be considered, as such a corps is of little or no value to the State. Political influence is only too often sought and accoWed, and the existence of partisanship is in cases evident. As I have previously pointed out, every facility is given by regulations for the representation of any matter, and such representations receive every consideration. Those, too, who lend themselves to methods proscribed by regulations seriously retard the establishment of discipline, and do much to undermine the efficiency of the Force. Partisanship also has a most pernicious influence on the well-being of the Force, and those who have it in their power to discourage it must be held responsible where it occurs. The battalion system is working fairly well. In some cases, where the corps are scattered, it is difficult for commanding officers to carry out as frequent inspections as are necessary. Every endeavour must, however, be made to do so, for the corps suffer where this is not done. At the officers' clubs in the various centres periodical lectures are delivered by members, to the benefit of all concerned. Classes for officers and non-commissioned officers have been inaugurated in some districts, and with good results; this is especially the case in the Otago District.