January 31, 1912.
Cassel returned last night, having travelled continuously from Berlin. At 10 a.m. on Monday he saw Ballin, who went forthwith to the German Chancellor, and in the afternoon he saw Ballin, Bethmann-Hollweg and the Emperor together. They all appeared deeply pleased by the overture. Bethmann-Hollweg, earnest and cordial, the Emperor ‘enchanted, almost childishly so.’ The Emperor talked a great deal on naval matters to Cassel, the details of which he was unable to follow. After much consultation the Emperor wrote out with Bethmann-Hollweg paper, ‘A,’ which Ballin transcribed. The second paper, ‘B,’ is Bethmann-Hollweg’s statement of the impending naval increases, translated by Cassel. Cassel says they did not seem to know what they wanted in regard to colonies. They did not seem to be greatly concerned about expansion. ‘There were ten large companies in Berlin importing labour into Germany.’ Over-population was not their problem. They were delighted with Cassel’s rough notes of our ideas. They are most anxious to hear from us soon....
Such is my report.
Observations.
It seems certain that the new Navy Law will be presented to the Reichstag, and that it will be agreed to, even the Socialists not resisting. The naval increases are serious, and will require new and vigorous measures on our part. The spirit may be good, but the facts are grim. I had been thinking that if the old German programme had been adhered to, we should have built 4, 3, 4, 3, 4, 3, against their six years’ programme of 2, 2, 2, 2, 2, 2. If their new programme stands, as I fear it must, and they build 3, 2, 3, 2, 3, 2, we cannot build less than 5, 4, 5, 4, 5, 4. This maintains 60 per cent. superiority in Dreadnoughts and Dreadnought Cruisers over Germany only. It will also be 2 keels to 1 on their additional 3 ships.
The creation of a third squadron in full commission is also a serious and formidable provision. At present, owing to the fact that in the six winter months the first and second squadrons of the High Sea Fleet are congested with recruits, there is a great relief to us from the strain to which we are put by German naval power. The addition of the third squadron will make that strain continual throughout the year. The maintenance in full commission of 25 battleships, which after the next four or five years will all be Dreadnoughts, exposes us to constant danger, only to be warded off by vigilance approximating to war conditions. A further assurance against attack is at present found in the fact that several of the German Dreadnoughts are very often the wrong side of the Kiel Canal, which they cannot pass through and must therefore make a long détour. The deepening of the Canal by 1913 will extinguish this safety signal.[[11]] The fact that the defenders are always liable to be attacked while only at their ordinary average strength by an enemy at his selected moment and consequent maximum strength, means that our margins would have to be very large. Against 25 battleships we could not keep less than 40 available within twenty-four hours. This will involve additional expense.
The German increase in personnel must also be met. I had intended to ask Parliament for 2,000 more men this year and 2,000 next. I expect to have to double these quotas. On the whole the addition to our estimates consequent upon German increases will not be less than three millions a year. This is certainly not dropping the naval challenge.
I agree with you that caution is necessary. In order to meet the new German squadron, we are contemplating bringing home the Mediterranean battleships. This means relying on France in the Mediterranean,[[12]] and certainly no exchange of system[[13]] would be possible, even if desired by you.
The only chance I see is roughly this. They will announce their new programme, and we will make an immediate and effective reply. Then if they care to slow down the ‘tempo’ so that their Fleet Law is accomplished in twelve and not in six years, friendly relations would ensue, and we, though I should be reluctant to bargain about it, could slow down too. All they would have to do, would be to make their quotas biennial instead of annual. Nothing would be deranged in their plan. Twelve years of tranquillity would be assured in naval policy. The attempt ought to be made.
We laid these matters before the Cabinet, who decided that a British Cabinet Minister should go to Berlin and selected Mr. Haldane for that purpose. The ex-Emperor in his Memoirs makes a ridiculous story out of this:—