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PUBLIC RECORD OFFICE

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C.O. 885

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PUBLIC RECORD OFFICE, LONDON

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Naval Reserve is not the only, or indeed the chief step in advance, in connection with the personnel of the fleet, for it has been agreed that if possible one of the ships of the Australian Squadron in permanent commission shall be manned by Australians and New Zealanders under officers of the Royal Navy, and that 10 cadetships in the Royal Navy shall be given annually in Australia and New Zealand.

I have accordingly great pleasure in recommending to His Majesty's Government that the offers of assistance which have been received should be accepted.

Sir Wilfrid Laurier informed me that His Majesty's Government of the Dominion of Canada are contemplating the establishment of a local Naval force in the waters of Canada, but that they were not able to make any offer of assistance analogous to those enumerated above.

I have alluded to the fact that our interchange of views at the conferences have been characterised by mutual frankness, and I desire to put on record the facts and arguments which thought it my duty to set forth.

In the first place, I pointed out that even after the Colonial Parliaments had ungrudgingly increased the proportion of their assistance towards the Naval Defence of the Empire, as recommended by their Ministers, the taxpayers of the British Empire would, in respect of Naval Expenditure, still be in the following relative positions :—

Population (White).

Nural Contribution per Caput per Annum.

J. d.

United Kingdom

41,454,621

15 2

Cape Colony

538,000

1 101

Commonwealth of Australia

8,765,800

Dominion of Canada

5,338,883

1 02

Nil

Natal

64,951

10 91

Newfoundland

210,000

0 31

New Zealand

772,719

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For the year 1902-3 the Navy Estimates amounted to 31,423,000l. after deducting appropriations-in-aid other than contributions from the self-governing Colonies. Of this sum the self-governing Colonies would, on the basis of the new agreements, have paid 328,COOL.

This table shows how large a proportion of the burden falls upon the taxpayer of the United Kingdom, and although it is true that by far the larger portion of the money which he provides is spent within the United Kingdom, yet it so happens that more of the money provided by the taxpayer of the United Kingdom is spent in the British Dominions beyond the seas than the British Dominions beyond the seas contribute to the maintenance of the British Navy. Additional interest is lent to the fact by an analysis of the trade which the British Navy has to protect. In the year 1900 the seaborne trade of the Empire may be roughly stated to have been worth between eleven and twelve hundred millions sterling; but of this vast sum a, proportion of certainly not less than one fourth was trade in which the taxpayer of the United Kingdom had no interest, either an buyer or seller, of the particular goods represented by these values. It was either inter-Colonial trade or trade between the British The taxpayer of the United Dominions beyond the seas and foreign countries.

Kingdom has therefore the privilege, not only of taking upon himself the lion's share of the burden the interest in which is shared between himself and his fellow gubjecte in the dominions beyond the sesa, but also a not less share of the burden in respect of interests which are not his own, but exclusively those of his fellow subjects beyond the

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I nxpressed my hope that this simple statement of fact would help the Colonial taxpayer to realise the extent of the advantage he reaps from the existence of one Navy for the whole Empire. He is not only relieved thereby of a heary burden of ication in time of peace, but in time of war he knows that to him, it faced by any

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possible coalition, is furnished the concentrated strength of one Navy under one command.

In reply to an inquiry, I undertook to endeavour to form an estimate of the Naval obligations which would be forced upon the British Dominions beyond the seas if they were nations with a separate existence, and not, as now, partner nations of the British Empire, and it was suggested that the proper comparison would be between the Commonwealth of Australia and New Zealand or the Dominion of Canada and some state with a population of about the same size.

I pointed out that if such a basis of comparison were chosen the aunual Naval expenditure of Holland is 1,400,0001., and that of Argentina 920,0001., not to mention a past capital expenditure of several millions which must have been incurred in the creation of the fleets and for the proper equipment of dockyards and Naval bases. These countries were only taken because their populations roughly correspond in size with those of Australasia and Canada, and not because they are in other respects in any way comparable. Indeed, I submitted that this was not an adequate or satisfactory comparison. Each great group of dominions beyond the seas would, so it seemed to me, have to face the Naval position in which it found itself, and the governing conditions of that position would be the political and geographical environment of the group. As a matter of fact, each of these groups would find itself within the orbit of a great Naval Power. The Dominion of Canada would have to frame its Naval policy with a view to the Navy of the United States. The Commonwealth of Australia and New Zealand would be forced to remember that France in New Caledonia, and Germany in New Guinea, are near neighbours, and that the Naval power of Japan is steadily increasing. Cape Colony and Natal would constantly find themselves reminded of the fact that France is their neighbour in the Indian Ocean, in Madagascar, and that the greater part of Western South Africa is German. It is not easy in either of these cases to see how it could be possible to avoid the influence of those forces which have forced Japan to become a Naval Power. The Naval Budget of Japan for the year 1901-2 was 3,700,000l., and this sum included nothing for interest, sinking fund, or depreciation account in connection with former capital expenditure on stores, ships, dockyards or Naval bases.

These are the facts and arguments which 1 felt it my duty to lay before the Premiers, and to which, whether agreeing or disagreeing, they have listened with that friendly courtesy which has made all our interviews so agreeable a recollection. I recapitulate them now because the danger to the Empire which I fear is that Canada, South Africa, and Australia, being in fact continente, should become too much continental and too little maritime in their aspirations and ideas. The British Empire owes its existence to the sea, and it can only continue to exist if all parts of it regard the sea as their source of existence and strength. It is therefore desirable that our fellow subjects in the dominions beyond the seas should appreciate the importance of Naval questions. If they will undertake a larger share of the Naval burden, well and good. But I regard it as of oven more importance that they should cultivate the maritime spirit; that their populations should become maritime as ours are, and that they should become convinced of the truth of the proposition that there is no possibility of the localisation of Naval force, and that the problem of the British Empire is in no sense one of local defence.

The sea is all one, and the British Navy therefore must be all one; and its solitary task in war must be to seek out the ships of the enemy, wherever they are to be found, and destroy them. At whatever spot in whatever sea these ships are found and destroyed, there the whole Empire will be simultaneously defended in its territory, its trade, and its interests. If, on the contrary, the idea should unfortunately prevail that the problem is one of local defence, and that each part of the Empire can be content to have its allotment of ships for the purpose of the separate protection of an individual spot, the only possible result would be that an enemy who had discarded this heresy, and combined his fleets, will attack in detail and destroy those separated British squadrons which united could have defied defeat.

SELBORNE.

August 7th, 1902.

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