"Under certain conditions the establishment of local defence flotillas, consisting of torpedo craft and submarines, might be of assistance in time of war to the operations of the Fleet, but such flotillas cannot co-operate on the high seas in the wider duties of protection of trade and preventing attacks from hostile cruisers and squadrons. The operations of Destroyers and torpedo-boats are necessarily limited to the waters near the coast or to a radius of action not far distant from a base, while there are great difficulties in manning such a force and keeping it always thoroughly efficient.
"A scheme limited to torpedo craft would not in itself, moreover, be a good means of gradually developing a self-contained Fleet capable of both offence and defence. Unless a naval force—whatever its size—complies with this condition, it can never take its proper place in the organisation of an Imperial Navy distributed strategically over the whole area of British interests.
"The Fleet unit to be aimed at should, therefore, in the opinion of the Admiralty, consist at least of the following: one armoured cruiser (new Indomitable class, which is of the Dreadnought type), three unarmoured cruisers (Bristol class), six destroyers, three submarines, with the necessary auxiliaries such as depôt and store ships, etc., which are not here specified.
"Such a Fleet unit would be capable of action not only in the defence of coasts, but also of the trade routes, and would be sufficiently powerful to deal with small hostile squadrons, should such ever attempt to act in its waters.
"Simply to man such a squadron, omitting auxiliary requirements and any margin for reliefs, sickness, etc., the minimum numbers required would be about 2300 officers and men, according to the Admiralty scheme of complements.
"The estimated first cost of building and arming such a complete Fleet unit would be approximately £3,700,000, and the cost of maintenance, including upkeep of vessels, pay, and interest and sinking fund, at British rates, approximately £600,000 per annum.
"The estimated cost of the officers and men required to man the ships does not comprise the whole cost. There would be other charges to be provided for, such as the pay of persons employed in subsidiary services, those undergoing training, sick, in reserve, etc.
"As the armoured cruiser is the essential part of the Fleet unit, it is important that an Indomitable of the Dreadnought type should be the first vessel to be built in commencing the formation of a Fleet unit. She should be officered and manned, as far as possible, by Colonial officers and men, supplemented by the loan of Imperial officers and men who might volunteer for the service. While on the station the ship would be under the exclusive control of the Dominion Government as regards her movements and general administration, but officers and men would be governed by regulations similar to the King's Regulations, and be under naval discipline. The question of pay and allowances would have to be settled on lines the most suitable to each Dominion Government concerned. The other vessels, when built, would be treated in the same manner.