THE NAVAL SCARE OF 1909.

Dominion, Volume 5, Issue 1503, 27 July 1912, Page 5

THE NAVAL SCARE OF 1909.

"ECONOMIST" REMINISCENT. WHAT THE ARMAMENTS TRADE NEEDS. The London "Economist," in its issue, of Juno 8, published an interestiii;; aHiclo on the 1909 naval scare. It said:— As every business man can understand, an annual panic, supported every three or four years by a biff supplementary panic, has of late become, an element of success in tho'armaments trade. After all, it is useless to manufacture battleships unless you can sell them, and this great industry must rely largely upon tho homo bads, resting upon an iucorao tax now graduated up to Js. 7d. in tho pound, and upon iv pretty severe system of death duties. What the attitude of the Board of Admiralty should be during the annual scare E<?ason, which, as was indicated last week, seems unhappily to be again upon us, wo must leave to' tho vrritera on constitutional practice (o decide, but there can be littlo doubt as to its actual posture. No bettor example of this can be found than tho North Sea panic of 1009, from which the public, especially the wealthy classes, aro still smarting. Tho profits which flowed into private pockets from that amazing output of imaginative journalism and false information will never bo known: ixnd even now it is haul to measuro exactly the wholo cost of the alarm and of the fictions which spread it, for a really successful panic like that of 1909 is followed not by !i mere l-cmponuy outburst of esrrnvatfMiop. but by a permanent nnd continuous growth in expenditure. Tho throe million incrca-» in tho naval budget fur inon whs followed bv a five million, increase in 1010, and a four million incronw in 1911. This year's 73stimates for 1912 (which were to have exhibited 11 bis economy) reach tho awful Ljotal of millions higher

than tho 1908-9 figure; ami that total is now- to lie swollen by tho Supplementary Estimates, for which Hie Mediterranean scavc has been cleverly worked up. This vast expenditure stands in no relation to German activity, it U a produce of British trade enterprise, quite on tho lino.? of Mr. Churchill's promise to the Glasgow I'ovt Trust. Germany's Naval Estimates only rose throe millions, while ours rose twelve. As an equally disastrous move may now bo in contemplation, wo ar<> anxious to warn tlioso who Have not grasped tho connection between super-taxes ami super-Dreadnoughts of the danger, mid wo cannot do so better than, by refreshing their memory with sonic essential facts of tho 1901) situation.

The Clouds Gather. Clouds, heralding the Navy Estimates, began to gather when "The Time-;" solemnly warned its readers, early in the year, that German shipbuilding was considerably in advance of their programme. "When tho Estimates appeared on March 12, they spread consternation, among sober folic. The total nskod for was .£35.142,700 —an increase of close on three millions— of which dC8,855,19l was for new construction. The programme provided for laying down six protected ■ cruisers, 2 Od-e----stroyers, submarines to the value of half a million sterling, and four Dreadnoughts, two to bo begun in July and two moro in November, 1909. But tlus was not all. The Government further asked to be entrusted with discretionary powers enabling them, if necessnry, to make preparation for the rapid construction of four more largo armoured ships, laid down in April, 1910, to ho ready by 1912. . . . But tho second statement made by Mr. •M'Kenna was the grnnd argument of his speech, and this supplied the basis of tho panic. Whereas, ho said, the IDOS Estimates had been based on tho hypothesis that Germany would, in tho autumn of _l!) 10, have 5 Dreadnoughts complete or approaching completion, while England would have 10, a new situation had been created by tho Admiralty's discovery (through its "Intelligence" Bureau) _ tlint they had been mistaken in their estimate of tho rate of German construction. Although even now he did not know the precise rate at which the German Navy was progressing, he asked the House to assume that the German rate of construction would equal, if it did not surpass, that of our own yards, and would give Germany 9 Dreadnoughts in the autumn of 1910, and in February, 1011, not 9, as had been, estimated, but 13. Tho position, therefore, according to Mr. M'Kenna in thi3 solemn statement of March 10, 1909, was that in 1911 we should have 1G Dreadnoughts to Germany's 13, and in 1912 20 to tlrciT 17. Admittedly, Germany had not as yet got one Dreadnought; and when pressed by questions, Mr. M'Kenna could only say—as regards the four whoso Decelerated construction was responsible for_ the Estimates and the- alarms" on which they were based—ho knew that ono of them, was laid down and that two of them were not laid down. As to tho fourth, he did not know. Mr. Balfour followed, and improved upon these alarmist vaticinations. He assumed not only thnt these four German Dreadnoughts that all actually under construction, but that Germany, in addition to being four months ahead of her known programme, had acquired such phenomenal constructive power that in July, 1911, she would have not only tho 13 feared by Mr. M'Kenna, but 17; and in 1912 not 21,"but 25. This was too much even for Mr. M'Kenna, and Mr. Asquith declared it to be a physical impossibility. Yet, although Mr. M'Kenna had a distinct understanding from the German Government thnt it was not their intention to accelerate their programme, and though ho allowed that the two-Power standard must not be applied to Dreadnoughts; only, but to the whole Fleet, he continued to sneak of Germany's 17 Dreadnoughts in 1912, and of tho need for power to lay down the additional four ships of tho Estimate. If a panic followed, as it did, Mr. M'Kenna and his Intelligience Department were wholly to blame. On March 17 Admiral von.Tirpitz pointed-out ;in the Reichstag that Germany would havo not 17. but 13. Dreadnoughts in 1912, and declared thnt he, did not know how or upon what grounds England and Mr. M'Kenna arrived at the larger figure. Indeed, Sir Charles Dilke declared that wo had a much greater naval preponderance at that mo-, ment than wo had ever had at any period of our history. But the panic-mongers had got tho bit between their teeth. The Bubble Pricked. Although tho conjectures on which the Estimates were admittedly based had been disposed- of by the frank statement of Admiral von Tir-pitz, the 35 millions were voted, and when July came Mr. M'Kenna told the Houso that, after very anxious and careful examination of tho conditions of foreign shipbuilding, ho found it was desirable to' lay down the additional four ships, so that tho whole eight would be completed by March, 1912. So tho panicists had their way. Tho Estimates for March, 1910, showed another huge increase. But the super-taxes had now been passed, and "The Times" remarked: "The public having been promised the- four ships and five more in tho new programme, and lenrning as well that Germany had not accelerated her rate of construction, appeared to he contented." Mr. M'Kenna still declared that "as regards the statement which 1 I made last year I have nothing to withdraw." Yet in February, 1911, Germany had only five Dreadnoughts! Directly questions by Mr. R. Harcourt (February 8, 1911) at what date in 1910 the four German Dreadnoughts, responsible for the 1909 scare, were completed, Mr. M'Kenna had to admit that they were not yet completed: that none of the 1909-10 German programme would bo completed in tho current year; that there were not • thirteen German Dreadnoughts under construction iu 1909; and it seemed there, would not bo seventeen till 1913. So tho bubble was pricked nt last, with a vengeance; but the harm was done. A candid review of the circumstances, at ,this distance of time (adds our contemporary) only justifies up to the hilt the words of the "Economist." winch characterised them as "the most disastrous and discreditable incident in the records of our public finance."