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and twelve hundred millions sterling; but of this vast sum a proportion of certainly not less than onefourth was trade in which the taxpayer of the United Kingdom had no interest either as buyer or seller of the particular goods represented by these values. It was either intercolonial trade or trade between the British dominions beyond the seas and foreign countries. The taxpayer of the United 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-subjects in the dominions beyond the seas, 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 seas. I expressed 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 heavy burden of taxation in time of peace, but in time of war he knows that to him, if faced by any 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 annual naval expenditure of Holland is £1,400,000, and that of Argentina £920,000, 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. 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 £3,700,000, 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 I 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 continents, 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 material 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 even 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. 7th August, 1902. Selborne.

3—A. 7.

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