The carbines, Lee-Metford and Winchester, are in good order.
      Both Winchester and revolver ammunition have been issued to the men on repayment.
      Lee-Metford ammunition has not been issued excpt for the Glacier Creek trouble and on the return of the party was returned into the seregeant major's store.
      A further supply should be forwarded next season in view of the proposed new posts.

      There have been few crimes committed in this district during the past year. Of these the most serious was giving liquor to Indians, a warrant was issued but the accused party was not to be found. It is supposed he has gone to Circle City, Alaska. The other cases were, one of wife-beating and a few petty larcenied committed on tne creeks. The Indian trouble at Pelly referred to in my report of last year has gone no further. With such a large number of men coming into the country every spring, of necessity, there is a certain percentage of criminals amongst them. Having no means of learning their past record, it is impossible to pick them out until such a time as a crime is committed. This element is increasing, and will increase. It is noticed, however, that through the fear of Canaddian law and its enforcement by the small police detachment here many continue their journey a couple of hundred miles down the river to Circle City. At the present time we have a lunatic in the guard room, who gives us a great deal of trouble.

      The running of the boundary line last winter determined the fact that gold- bearing creeks which hitherto were supposed to be in American territory are wholly, or in part, in Canada. The two principal ones being Miller and Glacier. Notice was sent the miners that these, as well as certain other creeks specified in the notice, were in Canada and subject to her jurisdiction and laws. This was cheerfully accepted and mining regulations adhered to and all the necessary government fees paid.
      A few miners denied Canada's jurisdiction and right to collect fees, on the ground that there was no join survey and a possibility of error in the work. However, I went up to Miller and Glacier Creeks and all dues were paid without any trouble, except that of a hard trip, but as all trips in this country are of that nature, it was part of the bargain. On Glacier Creek, a number of the miners undertook to run matters in accordance with their ideas of justice and set themselves up as the law of the land. The trouble ended however by the Canadian law being carried out. A special report of this case has been already made.
      As far as I can learn the amount of gold taken out this season is about $300,000 or 17,647 oz., chiefly from Miller and Glacier Creeks. This is a slight increase on last year. The average cost of refining and coining dust is $5 per $1,000 at the U. S. Government mints at San Francisco and Helena.
      In August of this year a rich discovery of coarse gold was made by one George Carmack on Bonanza Creek, a tributary to the Klondike or Trondec River which flows into the Yukon River about 50 miles from here, entering from the south-east. His prospect showed $3 to the pan. As usual such a prospect created a stampede for the new diggings. Men left their old claims and with a blanket, axe and a few hardtack prospected on the new creek, staked, and registered their claims which in all cases gave better prospects than any other heretofore. Many old timers state that this creek is fully as rich as any found in California in the early days. New creeks are being found daily, all prospecting well. Three hundred and thirty-eight claims have been registered to date and there stil remain about 150 to be entered.
      The country between Hunker Creek and McQuesten River which empties into the Stewart River, is full of small creeks and gulches which on being prospected have all given good results. It is probable that the gold belt will in time be found to extend from the Klondike to the Cassiar and that the whole of this to the Divide will prove to be rich in gold. Without doubt before long rich quartz will be found, but not worked until some means of transporting the necessary heavy machinery is provided and supplies can be got in at reasonable cost. The gold-bearing creeks in Canadian territory on the west side of the Yukon are as follows:- Gold, Miller and Glacier Creeks, all but one mile of Bed-rock, Moose and the first fork of Moose Creek, one mile of the three heads of Smith Creek, and of the several heads of Canyon Creek, about one mile of the Poker and Davis branches of Walker Creek, one and a half miles of Walker Creek.
      On the east side of the Yukon are the following creeks, Bonanza, Boulder, Adams, Eldorado, Victoria, Carmack, Bear, Last Chance, Hunker, Gold Bottom and Baker Creeks. These latter creeks are all of a fair size with a good supply of water for mining purposes, and of easy access.
      Bonanza is a large creek and it is possible there may be too much water to be easily worked in the spring.
      A gold commissioner is urgently needed and should reside on the principal creek of the district. One man cannot do all the work there is to be done now, such as visiting the different creeks, settling disputes, and keeping the office work up.

      If police duties are to be carried out effectually, a steam launch or patrol boat is an absolute necessity. Facilities for quick and independent communication and transportation will be required between here and the new post at Klondike and this result can only be attained by a steamer. With our present facilities for travel we can only make an average of 20 miles a day, and no great distance can be covered on account of the difficulty of carrying enough supplies. The rivers are the highways and a steam launch is as much required here as horses are on the prairies. The river runs very swiftly above here and a steamer should have sufficient power to overcome at least a five mile current. Two canoes were received in August last. Although highly spoken of by some eminent travellers and explorers I cannot altogether agree with them. They do very well with experienced men going down stream, but going up heavily loaded when they have to be tracked along rocky shores, they are in constant danger of being split and broken, even with great care. The river boat of the country which can be built in three or four days by an ordinary carpenter is the best all round.
      My idea of a steamer for this purpose would be a screw propeller 50 feet long 10-12 feet beam, steering gear in front, grates suitable for both coal and wood.
      The following is an extract from Inspector Strickland's report on the canoes:

      "I have found them not exactly the boat best fitted for travel on this river with heavy loads:
      "The shores of the Yukon are rough and rocky, the current rus at an average rate of 5 miles an hour. When I left this post for the Klondike last fall, to cut wood, the 2 canoes carried between them 3,000 lbs. of stores as well as nine men. The stores consisted of such haevy articles as rope, axes, provisions, bedding &c. The heavy loads made the canoes very hard to steer in the hands of inexperienced men and were continually striking against the shore to the great injury of their sides and bottoms. For this sort of work where time is not an object I consider the common river boat to be much the best, it is easily built and is very strong."

      The necessity for civil courts is daily increasing. They should be established with the least possible delay. The want of them creates a distrust in the administration of the government and there is an idea spreading that the country is occupied by the government solely for purposes of revenue.
      A registry office is urgently required, the duties of registrar and clerk of the court could be combined.

      A new post should be built in the spring at the mouth of the Klondike River which flows into the Yukon on the east side about 53 miles S.E. of Forty mile. This point will be the base of supplies for the new diggings and will in all probability be the largest camp in the country. Nearly 350 claims have been already registered in this district. As the average number of men required to work a claim is five it means a camp of nearly 2,000 workers as well as the usual number of camp fololowers. I intend to erect at this place in the spring two buildings, one a barrack room, the other a lock-up.
      The men will go up the river on the last ice about the end of April. A small post should also be built at Pelly, 240 miles S.E. of here, more especially if the Dalton trail from there to tide-wtaer be opened up. Horses can be ridden over this trail and the post would chiefly be required for the quick transmission and receipt of letters and reports. According to Dalton, with horses it is only nine days' travel light to the coast at Chilcat. In connection with the new posts which have to be built I would draw your attention to the small umber of men on detachment here, viz.; nineteen officers, N.C.O. and men.
      This number cannot be reduced, as the amount of work to be done in this post alone is very great. At Klondike there will be constant employment for 20 to 25 men, at Pelly for about 15. In Miller and Glacier district a N.C.O. and 3 or 4 constables should be stationed. A crew consisting of a N.C.O. and about 3 men with a native pilot should be provided for the steam launch. Therefore it will be seen that a strength of 75 men is small enough for the Yukon District.
      Considering the distance from any support, the length of time required to notify headquarters in case of any difficulty with the miners, the large increase of population, chiefly alien, and the immense amount of work involved in carrying out police duties in a proper and efficient manner throughout a large and difficult country, it will be seen that the number of men asked for is not out of the way.

      The route via St. Michael's is long, uncertain and fraught with many dangers by sea and river. In occasional seasons only can vessels get into Norton Sound before 1st July. St. Michael's has no safe harbour, only an open roadstead and when a gale of wind comes up vessels have to put to sea or to the shleter of an island called Egg Island. Last season 18 or 20 days were lost by the river boats on account of bad weather and ice. In consequence only two river steamers made one through trip each. The river service at present extends only to this point leaving the upper and richer part of the country entirely without supplies.
      In justice to the country a route should be opened up from the south, either by Teslin lake and the Hootalinka River or by a route known as Dalton's Trail which was travelled by a man of that name last season. Forty head of beef cattle were driven in over this trail from the coast to Pelly last summer. They arrived in good condition. The drovers report that they only had to kill four head on the way in, these were the heaviest animals, and had become footsore. Good bunch grass was found along the trail for a distance of over 150 miles. The height of the pass is said to be 2,800 or 3,000 feet above the level of the sea. The rise is very gradual, the country generally is rolling with some tablelands, with good fishing along the route and plenty of large game. Horses can be brought as far as Pelly without difficulty and from there can be floated down the river on rafts or scows. The time with horses from Chilcat to Pelly is 9 dyas light and 12 to 14 with packs. Dalton has travelled along this trail for some time, but has said little about it on acount of the large number of valuable furs that he was able to procure. Had the season not been so advanced when Dalton left here (10th September,) on his return to the coast by this trail, I would have sent some one with him, so that a report could have been made as to its practicability as a route for our own purposes. The revenue derived from this part of the country justifies a route being opened up from te south, either by a wagon road or a railroad.

      I sent out last spring nearly $9,000 and have now on hand nealy $12,000, chiefly revenue derived from mining fees. The miners think that as some return for the large amount of money paid in by them increased facilities for reaching the mines should be provided by the government.
      I would therefore recommend that a trail be constructed from this post to Miller and Glacier Creek, which would be entirely within Canada. At present the only available summer trail passes partly through American territory.
      I would also recommend that a trail be constructed from KLondike to Bonanza and Hunker Creek districts.

      In the spring of 1896 the government inaugurated a summer mail service. The contract was awarded to Capain Wm. Moore, who was to make three round trips between Juneau and Cudahy. He arrived here with the first of these mails from Juneau on the 18th June and on the 26th June left with the return mail for Victoria. The second mail arrived on the 27th July, in charge of the contractor's son Ben Moore, he returned by the same route that he came, leaving Cudahy on the 30th July. The third mail and last of the season arrived on the 11th September in charge of the contractor. He left on the 13th September for Circle City where he hoped to catch a steamer to go to Victoria via St.Michael's. He, however, was too late for the steamer and was compelled to drift down the river in a small boat and when last seen was near Fort Yukon where in is probable he was frozen in. I am informed that he has no chance of getting out this winter unless he returns to this post and goes out over the summit. The mail despatched by the government last December and which was lost on the summit was found on the 14th July, 1896, by one Henry Hyde, a miner coming into the country. He found it a short distance off the trail buried under 3 1/2 feet of snow. On the 14th Agust, Hyde arrived here and handed the mail over to the postmaster at Cudahy. The contents were considerably damaged, some of the letters being almost unreadable. I would recommend that letters sent in by this route at any season of the year be put in waterproof mail sacks. With regard to winter mails, I was instructed to furnish an estimate of their cost. This I did entering fully into details. I fear the cost will be against the adoption of the report, it cannot however be done for less. The trading companies here in sending out their private mail in winter figure on $1,500 as the least possible cost of around trip, and in some instances a trip has cost them $2,000. It is to be hoped we will have some word from the outer world this winter. No official letters have been recived at this post since August and they came via Seattle. A party leaves here on the 22nd of this month for Juneau via Pelly and Dalton's trail to Chilcat.

      The men's kits were complete to 1st June, 1895, since when there has been no full annual issue. From the supplies in store issues have been made as far as they would go, but the stores are now about exhausted. Severe and rough labour during the summer months has been very destructive on clothing, so much so that the men have had to purchase overalls from the trading companies at Yukon prices. A good supply of socks is urgently needed, we have none in stock, these articles wear out easily and in this country a man requires a large number of them.