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MR. BUXTON said that that was five years ago, since when new facts had arisen. Mr. Austen Chamberlain's Committee based their whole Report on the assumption that the British Fleet would be strong enough to secure and thereafter to maintain command of the sea (paragraph 18). In the Report before them the Admiralty representatives pointed out (paragraph 7) that the strength of the British Fleet relative to the second fleet of the world, the German Fleet, was less than it was in 1908, and that in consequence fewer war-ships could be spared for the local protection of trade routes.

MR. CHURCHILL said that the Admiralty deduction from that fact was (paragraph 15) that the number of captures was likely to be very considerable. The Report of Mr. Austen Chamberlain's Committee also left the impression on his mind that their inability to discover or devise a workable scheme greatly influenced their conclusions. Now they had before them what seemed to be a simple and practicable one.

THE PRIME MINISTER said that Mr. Austen Chamberlain's Committee rejected the principle of a national guarantee on two main grounds (paragraph 224) that the risks to our shipping were overestimated, and that every scheme suggested would prove a costly and inadequate remedy. They expressed themselves as ready to recommend such "if the case against inaction were overwhelming and the remedy "certain and complete." But, they added, "in their opinion neither of these condi- “tions holds good.'

MR. CHURCHILL said that the conclusions of Mr. Austen Chamberlain's Com- mittee could not be considered binding in the face of new facts

THE PRIME MINISTER said that he did not suggest that they should be, but before disturbing the conclusions at which they had arrived, it was desirable to make certain that the facts were new and material.

LORD ESHER pointed out that the two members of Mr. Austen Chamberlain's Committee most competent to form an opinion on the naval aspects of the question had not been able to be present at the concluding meetings of the Committee.

Of these two, Sir Charles Ottley had signed the Report with an important reservation, and Sir George Clarke (Lord Sydenham) had contributed what was practically a Minority Report.

(After an Adjournment.)

PRINCE LOUIS OF BATTENBERG said that the Admiralty desired to point out that Mr. Austen Chamberlain's Committee, in their conclusions, dwelt on the real risks and the actual losses, But, in the view of the Admiralty, that was not where the real danger lay. A certain percentage of loss was inevitable, but they did not think it would really be high. What they feared was that a few early captures would create a panic and that insurance rates would rise to prohibitive figures, out of all proportion to the real risks, or that the market for war insurance would cease to exist. If vessels were uninsurable they would not go to sea. It was on this aspect of the matter that the Admiralty wished to lay stress. When at the Admiralty during the Russo-Japanese war, he had been much impressed by the great rise in the rates for war insurance even for neutrals. Owners called perpetually at the Admiralty to enquire the whereabouts of Russian cruisers, to ask for protection and even for convoy. That showed how nervous the shipping interest would become. The letter which had been read only confirmed the opinion held at the Admiralty that on the outbreak of war owners would not send their ships to sea, and that those at sea would make for safety as quickly as possible. All their information pointed to the conclusion that this was the course likely to be adopted by shipowners generally. The Admiralty admitted that they were not principally concerned in this matter.

Their primary duty was to destroy the enemy's naval power; the direct protection of commerce was a secondary duty. The problem of trade protection against attack by Germany was more difficult than it was against attack by France. Consequently the percentage of loss would probably be greater. The Germans had a large fleet of swift passenger ships suitable for conversion into commerce destroyers. The other naval factors which had changed recently were enumerated in the report before them. What the Admiralty desired most to lay stress upon was that there would be a great rise due to panic, not to the real risk. This, the Admiralty feared, would lead to public outcry,

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