“Sir Ernest’s reply was that as far as Britain was concerned a great change had taken place during the interval, and that he was no longer able to endorse the views he had held at that time. The necessity for his country to maintain her supremacy on the sea at all hazards, and subject to no engagements of any kind, was now more clearly recognized than it had been a year ago. A one-sided understanding between Germany and Britain could no longer be thought of, since both Austria and France had now voted large sums for the enlargement of their respective navies. Austria would certainly be found on the German side, but France could by no means be said to be an asset on which it would be safe for Britain to rely, to say nothing about the two ‘dark horses,’ Russia and Italy. If Britain, in view of these uncertainties, were to permit Germany to nail her down to a fixed programme, she would dwindle down to a fifth-rate Power. Germany possessed her overwhelmingly large army with which she could keep in check Austria, Italy, Russia, and France, but Britain had nothing but her navy to guarantee her existence as a world power and to safeguard the roads that linked her to her colonies. For many decades Britain had enjoyed opportunities for accumulating big fortunes. These times, however, had now passed. During the reign of the Emperor William II, who, with a consistency which it would be difficult to praise too highly, had made his country a commercial power of world-wide importance, and who had raised German industrial enterprise and German merchant shipping to a condition of undreamt-of prosperity, Britain sustained immense losses in her overseas commerce. British trade was declining, and there was no doubt but that in the long run Britain would be compelled to abandon her principles of Free Trade.
“The question of the Austrian naval armaments appeared to trouble my friend more than anything, and this circumstance, combined with the doubtful attitude of Russia and the uncertainty of the situation in France, was evidently a source of great anxiety to the King. My friend remarked in this connexion that in his opinion the moment chosen for the conclusion of an understanding was very favourable to German but very unfavourable to British interests. It was useless to talk of an agreement so long as an element of mutual fear had to be reckoned with. At present this fear manifested itself in Britain in a manner which was most inopportune, so that it was bound to make the German public believe that Britain would be ready to come to an understanding even if the terms of it were detrimental to her own interests. Britain had got behindhand both with her commerce and with her naval programme. To fight her competitors in the world’s trade with a fair chance of success was impossible for more reasons than one, but the elimination of the disadvantage from which she suffered with respect to her naval armaments was merely a question of money. The funds that were required to bring the British Navy up to the necessities of the international situation would certainly be found, because they had to be found.
“I told my friend that I was astonished to hear how completely his views had changed on these matters. Not what he did say, but what he had left unsaid, made me suspect that official circles in England—partly, perhaps, through the fault of the German Government—had arrived at the conclusion that the latter would refrain from a further strengthening of the navy after the existing naval programme had been carried out, and that it would merely content itself with the gradual replacement of the units as they became obsolete. Such a proceeding could be justified only if the same plan were adopted by Britain also. If, however, his remarks implied that in the opinion of his Government the moment had now arrived for altering the ratio of naval strength existing between both countries by a comprehensive programme of new building, it would soon become evident that there were some flaws in that calculation. In view of any such intentions it was my opinion—which, however, was quite personal and unofficial—that Germany would have to decide upon such an increase of her navy as would enable her to carry on a war of defence with the certainty of success. If, therefore, Britain meant to go on building warships on a large scale, this would merely lead to an aimless naval race between the two countries.
“These remarks of mine concluded our first conversation, and I accepted my friend’s invitation to dine with him that evening in company with some prominent men of his acquaintance.
“In the evening I was greatly surprised to see that I was the only guest present. My friend told me that, in order to be alone with me, he had cancelled his invitations to the other gentlemen, stating that he did not yet feel well enough to see them. It was obvious to me that he had, meanwhile, reported on the outcome of our conversation, and that the atmosphere had changed. This change had without doubt been brought about by my remarks concerning the necessity for a further enlargement of the German Navy, if the action of Britain compelled our Government to take such a course. The long discussions that followed proved that this view of mine was correct in every detail.
“Sir Ernest explained that the Liberal Cabinet had acted penny wise and pound foolish in dealing with the question of the navy. This was the conviction of the great majority of the British people, and this action had caused the feelings of apprehension and of hostility animating them. The Liberal Government had thus made a serious blunder, and had, in his opinion, prepared its own doom by doing so. He thought the days of the Liberal party were numbered, and another party would soon be in office. Anti-German feeling would be non-existent to-day if the Liberal cabinet had not, because of its preoccupation with questions of social policy, neglected the navy. The whole matter was further aggravated by other questions of a political kind. France, on account of the French national character, had always been a doubtful asset to Britain, and, considering the state of her internal politics, she was so now more than ever. Germany, on the other hand, possessed a great advantage in that her military preponderance enabled her to rely with absolute certainty on her Austrian ally. He would say nothing about Russia, because he had never regarded the Anglo-Russian rapprochement as politically expedient.
“If it was admitted—and he thought this admission was implied by my remarks—that her colonial and her commercial interests made it imperative for Britain to maintain an unchallenged supremacy on the seas, he felt certain that some reasonable men would, after all, be able to discover a formula which would make an understanding between both countries possible. A great difficulty, however, was presented by my often reiterated demand that Britain must not abandon her principles of Free Trade. In questions such as these, she could, indeed, speak for herself, but not for her great colonies. History had proved that she lost her American colonies as soon as she tried to foist her own commercial policy on the colonists. He had no doubt that Germany, despite the disagreeable surprises which she had experienced when adjusting the system of her Imperial finances, possessed sufficient wealth to go on increasing her navy in the same proportion as Britain. The great mistake committed by the Liberal cabinet and by the other advisers of the King had been their assumption that financial considerations would prevent Germany from carrying out her naval programme in its entirety. German prosperity had grown far more rapidly, he thought, than even the German Government and German financial experts had believed to be possible. Signs of it could be noticed wherever one went, and one would turn round in astonishment if, during the season, one heard the tourists in Italy or in Egypt talk in any language but German. He, at any rate, felt certain of Germany’s ability to keep pace with Britain in the naval race, even if that pace was very greatly accelerated.
“Reasons of internal policy had convinced him that Britain would not in any case abandon her Free Trade principles within a measurable period of time, and as it was not intended to conclude a perpetual agreement, but only one for a limited number of years, he thought it was not at all necessary that Germany should insist upon her demand in connexion with this question. As the colonies enjoyed complete independence in these as in other matters, the difficulties would be insurmountable. In return for such a concession on Germany’s part, Britain would doubtless be willing to meet the views of the German Government in other respects. For these reasons he would be quite ready to change the opinion he had expressed in the morning, and to agree that it could produce nothing but good if either side were to appoint some moderate men for the purpose of discussing the whole question. Such a meeting would have to be kept absolutely secret, and both parties should agree that there should be no victor and no vanquished if and when an agreement was concluded. This condition would have to be a sine qua non.
“I promised Sir Ernest that I would use my best endeavours to this end when an opportunity should present itself, and we arranged to have another meeting in the near future.
“There is no doubt but that my friend is an extremely well-qualified negotiator. I do not recollect that during my long experience, extending over many years, I have ever come across a man who could discuss matters for hours at a time with so much self-reliance, deliberation, and fixity of purpose.”