17. When on my arrival I turned around me to see what was to be looked for to supply the place of Imperial expenditure, only second to our minerals, our forests attracted my attention. They could not fail to do so, because just before I came there was an outcry for the development of this industry by Government aid. With Lord Granville's assent I made liberal concessions, and thereby induced a pioneer company, shortly followed by others from Victoria, to embark capital in the enterprise. The public ardour here had, however, cooled, and an ignorant cry was raised against foreigners, and the prospects of the trade were systematically decried. Several causes besides this militated against it, but it is surmounting them, and at the present moment not only are the companies largely employing labour and expending money, but their own success is becoming an established fact, and the export is enormously increasing, and with good management must continue to increase indefinitely. Whilst on this subject I may allude to the question of the preservation of our forests, but as I am treating it more fully in a separate despatch I will only say that this and the kindred question of planting ought, at no distant period, to occupy the attention of our Legislature. 18. The pearl shell and pearl fishery may be said to have sprung into existence within the last few years. It employs a fleet of cutters and schooners, chiefly of small size, on the north-west coast, Port Cossack being the head-quarters. At Sharks Bay also there are a number of smaller boats. A licence fee on boats and a tax on shells has been imposed by the Legislature; laws for the protection of aboriginal divers and Malays have been enacted. I shall immediately have a Government cutter on the north-west coast for police and customs purposes, which will also be useful in cases of shipwreck amongst the islands and inlets, and in searching for and reporting the position of reefs, of anchorages, and of new banks of pearl oysters. It will probably hereafter become advisable to let areas for pearling under certain regulations as in Ceylon, but this could not well be done with our present means and knowledge.