It was impossible for English statesmen to avoid the suspicion that, on the sea as on land, the Germans meant by liberty the right to unlimited self-assertion.  Common prudence dictated close attention to the German Navy Laws; especially as they proved capable of unexpected acceleration.  The ‘Two Power’ standard, under the stress of German competition, became increasingly difficult to maintain, and English Liberals were inclined to denounce it as wasteful of money.  But, when a Liberal Government tried the experiment of economizing on the Navy (1906-8), there was no corresponding reduction in the German programme.  The German Naval Law of 1906 raised the amount of the naval estimates by one-third; and German ministers blandly waved aside as impracticable a proposal for a mutual limitation of armaments.

In 1909 this country discovered that in capital ships—­which now began to be considered the decisive factor in naval warfare—­Germany would actually be the superior by 1914 unless special measures were taken.  The British Government was awakened to the new situation (it arose from the German Naval Law of 1908), and returned unwillingly to the path of increasing expenditure.  The Prime Minister said that we regretted the race in naval expenditure and were not animated by anti-German feeling; but we could not afford to let our supremacy at sea be imperilled, since our national security depended on it (March 16, 1909).  The ‘Two Power’ standard was dropped, and the Triple Alliance became the object of special attention at the Admiralty.  The First Lord said on March 13, 1911, that we should make our navy superior to any foreign navy and to any probable combination which we might have to meet single-handed.  In practice this meant a policy of developing, in the matter of Dreadnoughts, a superiority of sixty per cent, over the German navy; this, it was officially explained in 1912, had been for some years past the actual Admiralty standard of new construction (Mr. Winston Churchill, March 18, 1912).

But even this programme had to be stiffened when the year 1912 saw a new German Navy Bill which involved an increased expenditure of L1,000,000 annually for six years, and had the effect of putting nearly four-fifths of the German navy in a position of immediate readiness for war.  Earlier in the year the British Government had announced that, if the German policy of construction were accelerated, we should add to our programme double the number which Germany put in hand; but if Germany relaxed her preparations we should make a fully proportionate reduction.  The German Bill came as an answer to this declaration; and it was followed in this country by supplementary estimates on naval account, amounting to nearly a million pounds; and this was announced to be ’the first and smallest instalment of the extra expenditure entailed by the new German law.’  The new British policy was maintained in 1913 and in 1914, though in 1913 the First Lord of the Admiralty made a public offer of a ’naval holiday,’ a suspension of new construction by mutual consent.  The Imperial Chancellor responded only by suggesting that the proposal was entirely unofficial, by asking for concrete proposals, and by saying that the idea constituted a great progress; and his naval estimates in 1913 were half a million higher than those of 1912.