the smaller vessels would have New Zealand waters as their headquarters. The New Zealand armoured cruiser would be stationed in China waters.

As regards Canada it was considered that her double seaboard rendered the provision of a fleet unit of the same kind unsuitable for the present. It was proposed that according to the amount of money that should be available Canada should make a start with cruisers of the Bristol class, and destroyers of an improved River class-a part to be stationed on the Atlantic seaboard and a part on the Pacific.

Agreement was arrived at with regard to various details, including the loan by the Admiralty of cruisers for the training of officers and men and the reception at Osborne and Dartmouth of Canadian cadets."

The self-governing Dominions therefore, by their action in 1909, practically expressed their full sympathy with the view that the naval supremacy of Great Britain was essential to the security of commerce, the safety of the Empire, and the peace of the world. They assented to the principle that the burden of Imperial defence must be borne by the whole of the Empire; and they agreed that each part of the Empire should make its preparations on such lines as would enable it to take its share in the general defence of the whole.

The total expenditure involved under the scheme agreed upon at the Conference of 1909 would have amounted to about 2,000,000l. per annum; but the position has been materially altered by circumstances which have arisen since then.

The Commonwealth was not satisfied with the mere fulfilment of the undertaking entered into at the Imperial Conference of 1909 to provide the Australian Fleet unit, but it has embarked upon an ambitious and well thought out scheme of naval shipbuilding and dock construction which was prepared by Admiral Henderson. This scheme if carried out in its entirety will provide in twenty-two years a fleet of fifty-two vessels, and the cost is estimated to amount to 88,000,000l., of which total 40,000,0001. will be expended upon the construction of docks, &c. The military defences of the Commonwealth have been organised on the lines suggested by Field-Marshal Lord Kitchener. Universal military training has been proclaimed, and when the scheme is in full operation it will provide a land force of at least 80,000 men at an annual cost of about 1,880,0001.

The proposals of the late Canadian Government would have involved a naval expenditure of 10,000,000l. spread over a period of ten years; but the scheme has been abandoned because it was felt that it was wholly inadequate and unsuited to the needs of Canada and the Empire. The Canadian Prime Minister is

now in this country for the purpose of conferring with the home Government as to the best means by which Canada can take up her share of the burden of Imperial defence.

Imperial defence is in the main a question of finance. The growth of population, commerce, and wealth of Germany, Italy, Austria, and the United States, and the other great naval Powers has enabled the construction of, and provided funds for, the maintenance of their fleets, and it is upon the growth of the population, commerce, and wealth of the self-governing Dominions and the Colonies and possessions, as well as the United Kingdom, that we must rely for the maintenance of our position in the, at present, bloodless, but none the less deadly, economic contest that is being waged for the naval supremacy of the world. It is of the utmost importance, therefore, that we should endeavour to obtain a clear and comprehensive view of the present economic position of the British Empire, and the prospect which it affords of our being able to finance and maintain our naval force up to any standard that may be reasonably anticipated in the future.

For the purposes of this inquiry the British Empire may be divided into four groups—namely, (1) the United Kingdom; (2) the self-governing Dominions (Canada, Australia, South Africa, New Zealand); (3) India, and (4) the Crown Colonies, Possessions, and Protectorates.

The economic position of the United Kingdom was fully discussed in this Review for October 1911 and March 1912; but it will perhaps be useful to recapitulate the salient features here. In the papers referred to the writer submitted data for estimating the national wealth and national income of each of the three divisions of the United Kingdom as set out in the following table:

The estimated expenditure of the Imperial Government for the year 1912-13 is 186,885,000l., which total includes Army 27,860,000l., and Navy 44,085,000l. The supplemental Navy estimates will bring the total outlay on the Navy up to about 45,000,000l.

The National Debt of the United Kingdom is 733,000,000l., or, say, 161. per head. It may be pointed out, however, that the

National Debt is not set off by revenue-producing assets such as State railways, which form a large part of the assets of the Governments of Australia, South Africa, and India, as well as some of the Crown Colonies. In calculating the expenditure of Great Britain on Imperial Services it would, perhaps, be strictly accurate to include the charges in respect of the National Debt, which was incurred mainly in building up and defending the Empire. But in order to eliminate all debatable points it will be assumed that Great Britain's contribution to Imperial defence is represented by the expenditure on the Army and Navy. The aggregate expenditure for the current official year under these headings is estimated at 73,000,000l., which is equivalent to 11. 12s. 3d. per head. The aggregate expenditure on the Army and Navy bears a ratio of only .0045 to the national wealth, and .035 to the national income of the United Kingdom. Both these ratios show the relatively small burden which our expenditure on armaments imposes in relation to our wealth and

resources.

The foreign trade of Great Britain during 1911 was valued at 1,355,591,000l. The imports of commodities and specie amounted to 743,547,000l., and the exports, including re-exports and bullion and specie, amounted to 612,044,000l., leaving an excess of imports of 131,503,000l. About one-third of the exports went to countries included in the British Empire, and about one-fourth of the imports came from British Possessions. The foreign trade of the United Kingdom for 1911 worked out at practically 301. per head.

Canada is unquestionably the most important of the Overseas Dominions. The Dominion has an area of 3,743,000 square miles and comprises one sixteenth of the land surface of the globe. Earl Grey has expressed his belief that Canada is destined to become the controlling portion of the Empire. Time alone can prove the accuracy of this forecast, but there can be no doubt that at the present moment the economic development of Canada is proceeding at a more rapid rate than that of Australia or South Africa. With a continent as large as Europe Canada has a population of only 7,158,000, or less than one sixth of the population of the United Kingdom. Somewhat extravagant estimates have from time to time been made as to the probable growth of population in Canada. One personage occupying a high position has estimated that within a comparatively short time the population of the Dominion will number 50,000,000; but, as a matter of fact, the increase between 1901 and 1911 was 1,833,000, or at the average rate of 183,300 per annum. It is true, however, that the intercensal increase of population amounted to 34 per cent., and was considerably higher than that

of any of the other self-governing Dominions. In recent years immigration into Canada has been on a very large scale; and in 1911 the arrivals numbered 333,849. Of this total 140,367 came from the United Kingdom and 119,147 from the United States. It must be borne in mind, however, that there is a very considerable volume of emigration from Canada.

The gross debt of Canada is 94,987,000l.; the assets are valued at 26,979,000l., leaving a net debt of 68,008,000l., equivalent to only 91. 10s. per head of the population. The revenue for the year to the 31st of March 1912 was 27,200,000l., the expenditure amounted to 19,400,000l., and the surplus to 7,800,0007. Out of this surplus it was possible to provide for all the capital and special expenditure of Canada for the year 1911-12 other than that of the National Transcontinental Railway, for which, however, out of the surplus revenue the sum of about 4,000,0001. was also available.

Of the total expenditure for 1910-11, 1,273,000l. was incurred in respect of Militia and defence, and 451,300l. in respect of Naval Services. The total expenditure on Defence, therefore, amounted to 1,724,000l., or 4s. 9d. per head of the population. This sum does not compare very favourably with the expenditure per head of the United Kingdom and Australia on like services; but it must be remembered that Canada is furthering Imperial defence by other means than her direct expenditure on military and naval services. She is adding to the security of the Empire by granting subsidies to steamship lines between Canada and the Mother Country, as well as the West Indies and Australasia. She has contributed generously to the Pacific cable, and has submitted proposals for cheaper cable communication with the Mother Country. She has assumed the defence of her own territory, and is co-ordinating the military forces of Canada with those of the Empire. She has manifested a strong disposition to develop an adequate system of naval defence, and finally she has initiated a system of trade preferences within the Empire. The estimates for the fiscal year ending the 31st of March 1913 include Militia 1,666,8901., and Naval Service 618,300l., making a total of 2,285,190l., or 6s. 5d. per head.

The trade balance of Canada is worthy of close attention, and the following table shows the aggregate trade during the past four years:

The growth of imports and the comparative want of expansion of exports show pretty conclusively the extent to which Canada is now borrowing from Great Britain and the United States.

The great bulk of the external trade of Canada is transacted with the United Kingdom and the United States. In the fiscal year to the 31st of March 1911 the exports to Great Britain were valued at 27,431,000l., and the imports from Great Britain at 21,998,000l. During the same period the imports from the United States were valued at 56,987,000l., and the exports to the United States at 23,840,0001.

The economic development of Canada is being effected very largely by means of British capital as well as British people, and the large excess of imports into the Dominion in recent years is mainly due to the very considerable amount of capital which has been subscribed in England for investment in Canada. During 1911 the amount of British capital invested in Canada was approximately 37,000,000l., and the aggregate of British investments in the Dominion at the present time is about 402,000,0001. It is important to note, however, that in addition to British capital there is a very large amount of foreign capital invested in the Dominion. American investments in Canada valued at approximately 94,000,000l., and foreign investments (mostly German) at 32,000,000l. The total indebtedness of Canada, therefore, in respect of British and foreign investments within her territory is not less than 528,000,000l. The bulk of this amount has doubtless been expended on railway construction and equipment. At the 30th of June 1911 there were 25,400 miles of railway in operation in Canada, and at the same date there were about 7000 miles under construction. In 1889 the mileage open was only 12,800. The capital expenditure at the end of June 1911 was 305,700,000l. The gross earnings for the fiscal year were to the 30th of June 1911, 37,700,000l., and the net earnings 10,540,0001.

The national income of Canada may be estimated to amount to 289,000,000l. per annum, made up as follows:

This aggregate gives an average of 401. per head. But the payment which Canada is liable to make in respect of her indebtedness for interest to British and foreign creditors cannot be less than 30,000,000l. per annum, and in making a strict calcula