I have now to put before you my proposals for a new Board of Admiralty, and the changes consequent thereupon. Having now seen all the principal officers who might be considered candidates for such a post, I pronounce decidedly in favour of Sir Francis Bridgeman as First Sea Lord. He is a fine sailor, with the full confidence of the Service afloat, and with the aptitude for working with and through a staff, well developed. If, as would no doubt be the case, he should bring Captain de Bartolomé as his Naval Assistant, I am satisfied that the work of this office would proceed smoothly and with despatch. I have discussed the principal questions of strategy, administration and finance with him, and believe that we are in general agreement on fundamental principles. If you approve, I will write to Sir Francis and enter more fully into these matters in connection with an assumption by him of these new duties. This appointment harmonises, personally and administratively, with that of the new Second Sea Lord, Prince Louis of Battenberg, of whom I have already written to you, and of whose assistance I have the highest expectations. Rear-Admiral Briggs, the Controller and Third Sea Lord, has, after a year, just begun to acquire a complete knowledge of his very extensive department, and I do not think it necessary to transfer him at the present time. He will be the only naval member of the old Board to remain. Rear-Admiral Madden is, in any case, leaving on January 5, and I am advised from all quarters, including both the proposed First and Second Sea Lords, that the best man to fill his place is Captain Pakenham. This officer, who is very highly thought of for his intellectual attainments, has also the rare distinction of having served throughout the Russo-Japanese War, including the battle of the Tsushima. The Home Fleet, which becomes vacant, has not, unhappily, any candidate of clear and pre-eminent qualifications. Admiral Jellicoe is not yet sufficiently in command of the confidence of the Sea Service, to justify what would necessarily be a very startling promotion. I shall, however, be taking the perfectly straightforward and unexceptionable course in placing Vice-Admiral Sir George Callaghan, the present Second in Command, who has been in almost daily control of the largest manœuvres of the Home Fleet, and who has previously been Second in Command in the Mediterranean, in the place of Sir F. Bridgeman. Sir John Jellicoe will be his Second in Command, and we shall thus be able to see what fitness he will develop for the succession.