industrial prosperity has been built up on the basis of British laisserfaire, her wealth has been drawn out of British purses, and as soon as that basis is withdrawn there will be a collapse in the German industries. Every German economist knows that, given equal conditions, Germany could not industrially compete with Great Britain.

Recognising the dangers which threaten her by the conclusion of a Pan-Britannic Customs Union, Germany has naturally done her utmost to prevent the unification of the British Empire upon an economic basis-an event which, for her, would be a calamity of the very greatest magnitude. Therefore no Englishman was more dreaded and hated by Germany than was Mr. Chamberlain. Therefore Germany penalised Canada when she took the first practical step towards the unification of the empire and the conclusion of a PanBritannic Zollverein by giving Great Britain a preference in her market. Therefore many Germans were overjoyed when the late Unionist administration was followed by a Government which was pledged to Free Trade for Germany throughout the British Empire. The victory of the Liberals was a victory for Germany, and the present Ministers were greeted as the friends and supporters of Germany— one might almost say as the unofficial representatives of Germany's interests in Great Britain, and as such they were overwhelmed with the Emperor's personal and somewhat embarrassing attentions.

The foregoing should suffice to show that Germany's abounding prosperity is largely due to certain temporary conditions which the short-sightedness of English administrations and the far-sightedness of Bismarck and his successors have created. It should also show that the conclusion of a Pan-Britannic Customs Union, which necessarily would in the main be directed against Germany, would lead to a rapid decline of German prosperity, and to a rapid exodus of a large part of her capital and of her industrial population, an exodus similar to that to which, unfortunately, we have become accustomed in this country. Germany, if she cannot defeat the conclusion of a Pan-Britannic Customs Union by diplomacy or force, can counteract its harmful effect upon her industries and prosperity only by expansion over sea. She can improve her unfavourable position as to commercial harbours only by securing the control of Antwerp and Rotterdam, which are the natural ports to her chief manufacturing districts in Rhenish Prussia and Westphalia. She can obtain secure markets only by acquiring extensive Colonies, both in temperate and tropical zones, which make her independent of other countries as regards the supply of raw materials, which give her an adequate outlet for her surplus population, and which at the same time afford expansive markets for her manufactures similar to those furnished by her Colonies to Great Britain.

Maritime expansion is not merely a hobby of the Emperor's, as so often is believed, but it is a question of life or death for Germany.

Germany, from her point of view, is perfectly justified in endeavouring to strengthen her industrial position by the acquisition of Rotterdam and Antwerp, which at one time formed part of the German Empire. Great Britain, on her part, is equally justified in preventing Germany from acquiring harbours from which a descent upon the English coasts would be comparatively easy. Germany is perfectly justified in trying to acquire Colonies for her abounding population; but Great Britain is equally justified in defending her Colonies, and in preventing their receiving so dangerous a neighbour as Germany might prove. Under these circumstances, it is clear that the question of the expansion of Germany depends in the first place on Germany's power to overcome the opposition which Great Britain, for the sake of self-preservation, is compelled to offer. There was much sense in the German Emperor's winged word, ' Germany stands in bitter need of a strong navy.'

Great Britain's opposition need not necessarily be overcome by war. A demonstration of sufficient naval force might suffice, as German writers have frequently pointed out, to overcome Great Britain's opposition to Germany's maritime expansion. Hence the great Navy Bill of 1900 stated in its preamble, Germany must have a battle-fleet of such strength that a war against the mightiest naval Power would involve risks threatening the supremacy of that Power.' As soon as Germany is able to threaten the supremacy of the mightiest naval Power she will be able to acquire the harbours, coaling-stations, and Colonies which she requires.

Those who doubt that the German Navy is primarily destined either to defeat the British fleet or to overawe Great Britain without war, in order to obtain a free field for Germany's maritime expansion, and those who find the leading principle of Germany's naval policy which was laid down in the Navy Bill of 1900 not sufficiently explicit, should ask themselves: Against which State, apart from Great Britain, can the German naval armaments possibly be directed?' Germany requires no fleet in case of a war with France, as a FrancoGerman war will be decided on land, as Moltke has pointed out. Russia has practically no fleet. Outside Europe, there are only two great naval Powers-the United States and Japan. Both countries are too far removed from Germany to make a war with Germany likely. Besides, the German fleet, proceeding to attack the United States or Japan, would find no coaling-stations open to her, and would have to pass within reach of the guns of the French and English coasts. In view of the intimate relations existing between Great Britain and the United States, and between Great Britain and Japan, Germany cannot think of a war against either country. Germany can strike westward only if Great Britain is on her side. It is almost inconceivable that Germany would run the risk of having her fleet cut off from her harbours by Great Britain or France or by both

Powers combined. Not only economically, but geographically as well, Great Britain bars Germany's way; if she wishes to take New York or Tokio she must first take London. The way to New York or to Tokio goes via London. Under these circumstances, the only State against which Germany's naval preparations can possibly be directed is Great Britain, and the small coal-carrying capacity of her battleships, which narrows their radius of action to a few hundred miles and makes trans-oceanic expeditions practically impossible, confirms this conclusion. I think the foregoing conclusions are unanswerable, and they show the absurdity of those who oppose the strengthening of our fleet against Germany because, as they assure us, Germany's intentions are peaceful, and because the German Emperor has made numerous declarations of good will towards this country-at least, since the time when an Administration which pursues a philo-German policy has come to power. His Majesty the German Emperor has indeed cause to be grateful to the Liberal party.

In the obsolescent ships of the pre-Dreadnought type Great Britain possesses a great superiority over Germany. Therefore it is only natural that the German Government is making a deliberate attempt to outbuild Great Britain in ships of the largest size-in ships which will decide the naval battles of the future. Will Germany succeed in outbuilding Great Britain ?

It is frequently asserted that Germany cannot outbuild Great Britain

(1) Because the German people will not, or cannot, stand the expenditure caused by the support of an all-powerful army and an allpowerful fleet;

(2) Because Great Britain can build warships more rapidly than Germany.

Both assertions are founded on insufficient knowledge. There was a time when the Germans considered themselves as a race of landsmen to whom naval expenditure seemed so much waste, and then the political parties opposed the naval policy of the Government. That time has passed through the teaching of the Emperor, of the professors of political economy, and of the Navy League, and especially through the great increase of their over-sea trade, which has taught the Germans that Germany's future does indeed lie on the water. Hence all parliamentary parties, the Socialist excepted, not only approve of Germany's naval expenditure, but constantly urge the Government to increase the naval armament of the country regardless of costs. For instance, at the great party meeting of the Liberal party at Wiesbaden in October 1907 the following resolution was unanimously adopted:

This meeting of representatives of the Liberal party expects the Liberal members in the Reichstag to advocate now as always with all determination the further increase of the German fleet and the greatest possible acceleration in

building it. This meeting of Liberal representatives considers it especially as absolutely necessary that the new German warships must at least be equal in size, armament, and rapidity to the ships building in other States.

Similarly emphatic pronouncements emanating from the Conservative and Clerical parties could be quoted.

As a matter of fact, the Germans are practically unanimously in favour of a fleet of overwhelming strength, and the Social-Democrats oppose the Government's demands for naval armament only in Parliament and pro forma, because they oppose on principle nearly all Government measures. In reality, many thinking Socialists are

in favour of a policy of vigorous transmaritime expansion, and are members of the German Navy League. The leading Socialist periodical of Germany, the Sozialistische Monatshefte, wrote at the time when the Navy Bill of 1900 was being discussed:

That Germany be armed to the teeth, possessing a strong fleet, is of the utmost importance to the working men. What damages our exports damages them also, and working men have the most pressing interest in securing prosperity for our export trade, be it even by force of arms. Owing to her development, Germany may perhaps be obliged to maintain her position sword in hand. Only he who is under the protection of his guns can dominate the markets, and in the fight for markets German working men may come before the alternative either of perishing or of forcing the entrance into markets sword in hand.

Herr Bernstein, the leader of the moderate section of the German Social-Democratic party, wrote in the same periodical, only a few months ago The Social-Democratic party is, and that unanimously, the most decided Imperial party that Germany knows.' The same gentleman wrote in the Nation:

The advantages of Colonial possessions are always conditional. At a given period a nation can only sustain a certain quantity of such possessions. As long as she was ahead of all other nations in productive power, England could support a much larger amount than any other modern nation. But the time of her industrial supremacy has passed away, or, at least, is nearing its end. With Germany the question is quite different. Although her rural population is now decreasing, she could, with a yearly increase of about 800,000 people, well stand more Colonial possessions than she actually holds, nor would the costs and outlays for her Colonies press very hard on her finances.

Many Germans share Herr Bernstein's views that industrial supremacy is leaving Great Britain for Germany, that Germany is the predestined heir to Great Britain's Colonial possessions, and that a policy of vigorous transmaritime expansion would not press very heavily on Germany's finances. Indeed, Germany's wealth has grown, and is growing so rapidly that Germany can stand an almost unlimited increase of her naval expenditure.

As regards the wealth of the well-to-do, we find that between 1892 and 1907, the income subjected to income-tax has grown by about 25 per cent. in Great Britain. During the same period it has

grown by exactly 100 per cent. in Germany. Apparently the national income of Germany is now considerably larger than is the national income of this country. As regards the wealth of the masses, we find that between 1901 and 1908 the deposits in the British savings banks have increased by but 18,000,000l., whilst they have grown by more than 200,000,000l. in Germany. The funds in the German savings banks are now four times as large as are the funds in the British savings banks. If we now look at the other side of the national account, we find that on an average British income-tax is 100 per cent. higher than German income-tax, that British local taxation is 150 per cent. higher than German local taxation, that the taxes on wine, beer, spirits, and tobacco are from four to ten times higher in Great Britain than in Germany, that Germany spends 16s. a year per head of population for military and naval defence, whilst Great Britain spends 288. per head in the same direction. As, furthermore, living is cheaper in Germany than in Great Britain, and as German wages are on an average as high as British wages, if not higher, not only the well-to-do in Germany but the German working man also can well afford to be taxed for the fleet. It is true that lately the cost of living has increased in Germany-the Social-Democrats have made the most of the meat famine and the bread famine cry-but wages have increased much faster. Richard Calwer, a leading Socialist, who may be relied upon not to give too roseate a view of the German working man's position, wrote only a few weeks ago, in the Arbeitsmarkt-Correspondenz :

During the last thirteen years the German Empire has experienced a time of greater prosperity than probably any other country. Between the years 1895 and 1906, the average yearly earnings of working men have risen from 371. 78. to 51l. 88., having increased by 147. 18. per worker or by 37 or 38 per cent. During the same period, wholesale prices of commodities have increased in Germany by 22.59 per cent. If we assume that retail prices have increased at a higher ratio, say 25 per cent., we find that the nett earnings of the German working man have increased by 12 or 13 per cent., that the workmen are 12 or 13 per cent. better off than they were twelve years ago. Similar calculations have lately been made regarding the United States. These show that, allowing for the increased cost of living, American wages have risen by only 8 per cent. during the same period.

The above facts and extracts-many more of the same portent could be given-should suffice to prove that Germany is a wealthy country, that the people are willing, able, and even anxious to bear the expenditure involved in challenging the naval supremacy of Great Britain, and that there will be no difficulty about providing the necessary funds, although people over there may disagree and quarrel about the manner of raising them or resort to loans.

We have officially and semi-officially been informed that we need not hasten to take up the German challenge, because Great Britain builds her warships far more quickly than Germany, and that she can therefore always catch up and outbuild Germany. The same people who know the intentions of the German Emperor towards this country