Nothing can be plainer than the fact that the Powers cannot continue indefinitely to increase their naval armaments on the scale that their proposed expenditure for the next few years indicates. The limit of the annual drain for naval purposes must be reached at last, and the time when it will be reached cannot be far off. In 1904 the United Kingdom spent £41,000,000 on the navy, and the administration of naval affairs. In the same year, and for similar purposes, France spent £ 13,000 000; Russia, £ 12,000,000; Germany, £11,000,000; and America, £20,000,000. Since then the naval expenditure of each country has been somewhat increased, and the contemplated future expenditure is greater still. Germany, in particular in spite of her heavy military expenditure, has formulated an ambitious scheme of naval expansion. As the population of the United Kingdom is only two-thirds that of Germany, while her naval expenditure is four times as great, it is very evident that Germany should be able, for some time to come, to spend annually considerably larger sums in improving her navy than Great Britain can probably afford to do.

The German army, too, although a much larger and more efficient fighting force than Britain possesses, costs very little more than the British army does. In 1905-1906 the total cost of the British army, of less than 300,000 men, was about £30,000,000. The cost of the German army for the previous year, with a strength upon mobilisation of upwards of 3,000,000 men, was only £32,000.000. Thus, Germany, spending as she does little move on her Army than Great Britain does on hers, and with a much larger population, should be able to spend much more on her navy than the latter Power.

It must be remembered, too, that the total cost of our navy and army falls almost exclusively on the British taxpayer; for the colonial contribution to the navy, in proportion to its total cost, is so infinitesimally small as to be almost a negligible quantity. This seems hardly fair to the British taxpayer, whose interest in maintaining the sea-power of the Empire is at least not greater than that of the colonial taxpayer.

The principle underlying British naval expenditure is the maintenance of a navy of sufficient strength to be equal to that of a possible combination of any two other Powers. If, say, Germany and Russia were to commence to increase their naval strength more rapidly than they have been doing, it might be difficult for Great Britain to maintain the two-Power standard of superiority. The strain on her resources might be too great. What, then, can be done.