admirably shown-indeed out of the great profits of our trade we were investing fresh capital abroad to the extent of about 100 millions annually. No doubt much of that was lent to bankrupt States and lost, but much more was well invested and returns large interestthe country was really prospering. She was not eating or drinking the balance due to her from abroad as she has done since then. Then followed the six years of bad trade. All the figures were reversedthe imports immensely increased, our exports largely fell off-the balance against this country was on the average about sixty millions worse than for the previous four years.

The cause of this was obvious—a succession of bad harvests caused us to import far more food than usual—the foreigner received forty or fifty millions a year more for food than formerly-and instead of taking our goods in return, he raised his tariffs against us, and took less of our goods than before. All the features of our trade became unfavourable, we might almost say alarming, and yet, strange to say, we ought to have been congratulating ourselves on our growing wealth if the formula be accepted that excess of imports is the test of a flourishing country. No doubt there is a measure of truth in that formula in so far as our large investments in former years enabled us to pay for the prodigious amount of food we required, but certainly it would have been a far truer sign of national prosperity if we had imported less, and exported more. The fact is that the trading of a country resembles in many respects the expenditure of a private individual-where we see a large expenditure maintained for many years we conclude justly that there must be a large income to sustain it, but an inflated expenditure for a few years often shows only the recklessness of a spendthrift and is the prelude to bankruptcy, so the large expenditure of the United States on European luxuries in 1865-72 was a bad sign, and heralded the crisis that followed, and the excessive amount of our imports from 1874-80 also showed that this country was in a very unprosperous state.

As I have already mentioned, however, the past year or two the tide has shown signs of turning-our exports increased last year by fully thirty millions, and promise to be larger again this year, and had the harvest turned out well our imports would have fallen off considerably-bad harvests are a dispensation of Providence, and we can only submit to them with patience, but there are other and important respects in which our national wealth might be greatly increased apart from foreign trade altogether. I refer to the excessive and needless waste of energy and resource that this country sustains from the excessive intemperance of a large part of the people. Our average expenditure in alcoholic drinks has been 130 millions sterling annually for several years, and the indirect waste from enfeebled labour, pauperism and crime may not improbably represent fifty millions more. Deduct from that total of 180 millions what the State takes in taxation, say roughly thirty millions, and there remains a tax of 150 millions voluntarily borne by the community, or about the value of half the consumption of food in the United Kingdom: Suppose that

one half of that could be saved by the community, what a vista of prosperity and social improvement would be gained.

Seventy-five millions a year would be added to the expenditure on food, clothing, houses, furniture, etc., or saved for profitable investment. All the unemployed labour in the country might be set in motion, and most of the trades suddenly galvanized into posperity. I have often marvelled that economists have directed so little attention to what is so fundamental to a nation's prosperity. No expansion of our foreign trade that is at all possible would yield so rich a result, and if the same energy was directed to this homely question that is now devoted to visionary attempts to force reciprocity on unwilling nations, far more substantial good would result.

I would add, in conclusion, that my best hopes for the development of our foreign trade depend upon the continuance of international peace. No small part of the heavy tariffs imposed by foreign countries are for the temporary exigencies of war expenditure, and the interest on debts thus created; any great war throws back for many years the tendency towards freer trade; the Civil War in America has probably cost this country hundreds of millions in the vast reduction of our export trade thereby caused. The present action of France is to a large extent the reflex influence of her disastrous war ten years ago, and the huge addition it made to her annual expenditure. Russia has also added to her tariff to meet the cost of the Turkish war, and so all round the compass. No country is so deeply interested in universal peace as we are, and none feels so quickly the disastrous waste of warfare. If a period of prolonged peace now sets in a general reduction of taxes may be expected, and some relaxation of tariffs will come about gradually merely on revenue grounds. This is certain to come about before long in America, for their national debt is being rapidly paid off, and we will share in the prosperity of the United States I may say almost in spite of their protectionist policy. For these various reasons I have no great fear for the future of this country-the severe lessons of the past six years were necessary and useful; they checked a prodigality and recklessness that were eating out the heart of the nation, and they have prepared the way for valuable social reforms, and will bring about still greater. Our advancement in national wealth has been certainly rapid the past twenty years, and what the country needs is not more wealth, but a wider distribution and better use of it. If the masses of our people had more of the thrift that prevails in France and Germany, and if the accumulation of wealth in London was more fairly spread through the country, there would be no cause to complain.

I must ask pardon in conclusion if I have diverged a little from the strict title of my paper-the subjects alluded to were all more or less allied to it, and whether or not the reader agrees with me, I hope he will allow that an honest attempt has been made to treat the subject candidly, and without any tinge of party or political feeling.

Appendix XV

BRITISH NAVAL SUPREMACY AND MERCHANT CRUISERS

TO THE EDITOR OF THE Daily Post

SIR,-The subvention of fast merchant vessels by the Admiralty in order to have them at the disposal of the country in time of war is a question of no small importance, and it is one that does not receive the attention it deserves.

It has been obvious for some time past that the manner in which the country subsidised certain of our fast merchant vessels, though at one time sufficient for all practical purposes, is so no longer.

When the policy of subsidising some of the faster ships of our mercantile marine was initiated some years ago the condition of affairs was this. Almost the whole of the fastest ships in the world were then under the British flag, and as these vessels had a speed and coal endurance far in excess of what any of our cruisers had, it was realized that in time of war these ships would be of great value as auxiliaries to the Navy. By paying to some of the great steamship lines a small annual subsidy for some of their faster ships we attained the right of using these vessels in time of war, and in the case of all new vessels the subsidies were only granted on the condition that they were constructed so as to be to the greatest possible degree efficient for purposes of war. A determined effort has been made for some years past by the principal foreign countries to wrest from us our supremacy in the fastest type of ocean steamships. With this object in view, such countries as France, Russia, Germany and America inaugurated a system of very heavy subsidies in order to create a fleet of vessels of the very fastest type for use in time of war. In spite of this, for some time this country maintained a preponderance in fast ships almost as great as it has in slower ships, but by a constant increase of their subsidies they have at length overtaken us, and, if matters continue as they are doing, they will end by almost crushing us out.

In each particular period considered only the vessels of the very maximum speed, and those that come within two or three knots of that speed, are included, as the vessels which form this class have always a value for naval purposes far and away above what slower vessels have.

It will be found that about 1880-1 almost all the vessels in the world of this type alluded to were under the British flag. In 1885 a 38

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third of such vessels were under foreign flags, but in our two-thirds were included all the ships standing at the very top of the class. In 1889 of these very fast ships there are almost as many foreign owned as British owned.

Looking at the figures this year, including all the vessels with speeds from 19 to 22 knots, there are about fourteen foreign ships to six British, and several countries taken alone are almost level with us, while, with the exception of two vessels, they have among theirs quite as large a proportion as we have of the ships which are among the very fastest of all. But the most discouraging point is that the tendency seems for matters to get much worse. Ships of the fastest type are confined almost entirely to the Atlantic trade, as nowhere else can a sufficient number of passengers be got to compensate for their excessive coal consumption, and small cargo carrying capacity. Some years ago there were practically five great Atlantic steamship companies of the first class keeping up a regular service and owned in this country. These were the Cunard, White Star, Inman and Guion lines, while a fifth was made up by the Anchor and National lines combined. Of these only the first two now remain, the rest having either been transferred to foreign flags, wound up, or ceased to exist as express lines, and no new lines have risen to take the place of those that are gone. This country has, therefore, practically only two lines left-the Cunard and White Star-from which to draw vessels of the very fastest type, and the future of these two lines as express lines is not very bright. The Cunard line, in order to hold its own against the competition of the foreign lines, two or three years ago built two ships of great speed, but since these ships were completed, not only has the line paid no dividend, but has run at a loss. The White Star line has only two ships which come up to modern requirements as regards speed, and half its service is carried on by old and comparatively slow vessels. In consequence of this it is hardly able to hold its own as an express line, yet under present circumstances it seems unable to see its way to take the steps necessary to provide a service equal to that provided by the foreign transatlantic lines. While our lines have thus decreased in number, and those left are in the position just stated, the number of great Atlantic lines which are foreign has increased from two to four, and, moreover, to still further improve their position, the North German Lloyd Line is building two new vessels of the very fastest type, while the Compagnie General Transatlantique and American line are both talking of adding to their express fleets. If Canada is successful in getting this country to help her to establish a new line of fast steamships between the two countries, it may for a while prevent our position from getting relatively worse. Any assistance we give to Canada in this matter will, however, unfortunately not form part of an all-round scheme for endeavouring to increase the number of our fast ships, but it will be done rather with the object of establishing closer relations with the colony, and the tendency will be for these new ships to be brought

into existence at the expense of the present ones, and thus in the end to leave us much in the same position as we are in now.

The question, therefore, is can this country afford not only to lose her supremacy in the fastest type of ocean steamships, but end by possibly losing altogether her vessels of this class? Consider what our position is. The mercantile tonnage of the British Empire is eleven times as large as that of France, and between four and five times as large as that of the two countries with the largest mercantile marines taken together; and it is considerably greater than that of France, Russia, Germany, Austro-Hungary, Italy, Spain, Turkey, Holland, Portugal, Denmark, Greece, Belgium, and Norway and Sweden combined. One of the most difficult duties for us in time of war will be the protection of this vast commerce. A Times correspondent recently put this matter clearly :— "It is vitally important," he says, "that the special condition on which the future of the Empire depends should never be forgotten or obscured for one moment. That future will be determined by the power to defend our commerce which is evinced in the first great war in which we engage. . . The teaching of history is clear and unmistakable, as Professor Seeley has so well shown . . . As the grandeur of Spain faded away from impotence to hold her own upon the high seas, so assuredly must the far greater empire of Great Britain crumble into dust if ever the power of defending her commerce is found wanting. That must be placed beyond the shadow of a doubt." The same fact is emphasized by Lord Brassey :"This empire is connected by ocean roads alone. Unless these roads can be preserved practically inviolate, the whole fabric will inevitably dissolve."

This vulnerability as regards our commerce is thoroughly realized abroad. M. Gabriel Charmes says:-" There are a few trade routes along which passes the wealth of the world, and on which is developed the very life of that immense world-wide British Empire. These routes to some extent correspond to the arteries. They are five or six, at the most ten. It would be an easy matter to scour them continually. A warfare directed against the commerce of an enemy has its rules, and we must have the courage to formulate them-mercilessly attack the weak, without shame fly before the strong." Admiral Aube, a late French Minister of Marine, insists that the policy of France against an enemy must be to send to the bottom every merchant vessel they can, with cargo, crew and passengers, not only without remorse, but proud of the achievement." The present Minister of Marine in France also belongs to that school which holds that the most effective way of weakening this country in time of war is by organized attacks on its commerce. Those who are in the habit of looking at the annual "Report of the Secretary of the United States Navy" know the great stress laid on the importance of making preparations for attacks on an enemy's commerce and “inflicting the most serious and lasting injury thereby."

The object of our large fleet of British cruisers is to protect our