In December, 1915, the steamship _Margit_ had been fitted out as a decoy, and on January 17, 1916, in Lat. 35.34 N., Long. 17.38 E., she was steering west for Malta, when she received S.O.S. signals on her wireless. The time was 9.30 a.m., and presently shots were seen falling close to the S.S. _Baron Napier_, who was about five miles to the southward. The captain of the _Margit_ was Lieut.-Commander G. L. Hodson, R.N., who then hoisted the Dutch ensign and altered course towards the _Baron Napier_. The latter kept making signals that she was being shelled and that the submarine was approaching; but when _Margit_ got within a couple of miles the submarine transferred the shelling to her. _Margit’s_ captain conned his ship, lying prone on the bridge and peering through the chinks in the bridge screen. In order to lure the enemy on he pretended to abandon ship, hoisted the international signal ‘I am stopped,’ and sent away the ship’s lifeboat with Sub-Lieutenant McClure, R.N.R., in charge. The ship now had every appearance of having been abandoned, but in addition to the captain lying unseen on the bridge, the guns’ crews, under Lieutenant Tweedie, R.N.R., and a sub-lieutenant, were remaining hidden at their stations. Riflemen were similarly placed on the foredeck and aft. [Illustration: FIG. 3.—DIAGRAM TO ILLUSTRATE APPROXIMATE MOVEMENTS OF ‘MARGIT’ IN HER ENGAGEMENT WITH SUBMARINE ON JANUARY 17, 1916.] After the ‘panic party’ had been sent away in the boat the enemy seemed fairly satisfied, ceased shelling, dived, and then reappeared a quarter of an hour later 800 yards away, with a couple of feet of his periscope showing. He was now going to make quite sure this was no trap, so, still submerged, he came within 50 yards of _Margit’s_ port side and then right round the ship, scrutinizing her carefully. At length, being apparently quite convinced that all was well, he steered for _Margit’s_ boat about a thousand yards away and came to the surface. Three men then appeared on the submarine’s deck, the German ensign was hoisted, and one of them waved _Margit’s_ boat to come alongside. This was as far as Lieut.-Commander Hodson deemed it advisable to let matters go. Giving the orders to down screens, open fire, and hoist the White Ensign, the enemy now came under attack. One shot seemed to hit abaft the conning-tower, and the submarine submerged. so fire was ceased and _Margit_ proceeded to pick up her boat. The davit-falls had only just been hooked on when the submarine showed her conning-tower 70 yards off, apparently in difficulties. The Q-ship therefore opened fire once more, but the enemy again submerged. Unfortunately the submarine had not been sunk, although no effort had been neglected. From 9.30 a.m. to about midday officers and crew had been compelled to keep in cramped, tiring attitudes, with very little knowledge of what was going on; and after he had finally disappeared _Margit_ had remained for about