Motto: Prudens futuri
The United States is at this moment the greatest creditor nation in the world. Its home trade is nearing the saturation point. It has a large fleet of merchant ships, most of them owned by the government, but lying idle. It has an unlimited source of men with brains and men skilled with their hands and a marvelous organizing talent for production. The nation’s circulating capital is being freely used to keep productive labor in employment on wages that have made the conditions of living in this country far in advance of any nation yet known. The United States has reached a pinnacle of prosperity almost undreamed. For it to continue to enjoy this prosperity amid peace is the aim of all our statesmen. The new methods used in this direction have been to endeavor to arouse a spirit of fair play among nations in their trade relations, to outlaw war, to limit armaments and to submit all questions affecting nations to a court of arbitration. These methods run counter to all the teachings of history, and the hope of success must therefore be based upon a conviction that human nature has undergone a complete change in the last few years, and that hereafter, what has happened in the past is no guide to what may happen in the future. These aspirations have naturally affected the thoughts and ideas of our people and have turned public opinion from a consideration of the quantity and quality of the instruments to be used for the defense of the nation’s institutions and possessions.
The prosperity of this nation is an evolutionary achievement receiving an impetus during the years of the World War before we entered it, and except for a few years immediately after the Armistice when a slackening of industry occurred, is still in full swing. Many nations that previous to the World War were financially sound and prosperous are now verging on bankruptcy. The productive labor in these countries, although decreased through losses in the World War, still exists, and only lacks a balanced and stable government and financial system to enable it to produce wealth and thus permit those nations to regain their places in the world. Competition between nations for the sale of their produce will increase as those nations regain this productive efficiency.
The United States has grown rich through production. Its capital is greater than that of any country in the world. Unless this production can be continued and increased, the nation’s great wealth must diminish.
“A merchant marine is the cause and justification of a navy” and “Trade follows the flag” are sayings that have become familiar to all. Capital, production, merchant ships, trade, profits and wealth are all links in the chain of prosperity of a nation. To arrive at an understanding of the relationship of these factors one with another and all with our sea power is the aim of this paper.
A nation’s wealth, and how accumulated.—The capital stock of any country is the sum of that owned by all of its members. It is the resources of the country available for such employment as will add an increment to that capital stock. By capital stock is meant all manner of wealth—land, buildings, food, luxuries, clothing, raw materials of whatever nature, machinery. It includes all those things from which an income can be derived, the abilities and talents of the people, or in other words, their ability to produce wealth.
For convenience, political economists divide this capital stock or capital of a country or nation into three parts:
- The part reserved for immediate consumption, consisting of such articles as food, clothing, furniture, and other articles of necessity or luxury in the possession of the citizens of the country, who will consume them themselves.
- The second part is what is called fixed capital. This affords its owners a profit without circulating or changing hands. Fixed capital consists of such articles as machines or instruments which abridge labor, real estate, transportation lines, improvements on land or buildings, and also the talent and ability of the citizens—in other words, the capital that is fixed as to locality and tenure. It produces profit, but is not sufficiently liquid to be turned readily into money.
- The third portion is the circulating capital which by changing owners affords revenue. This capital includes money or its equivalent (the medium by which all circulating capital is distributed), food stuffs in possession of its owners but not yet in the hands of the consumers, raw Materials for manufacture, and finished material in the hands of merchants.
All capital can be made to fall under one or another of these three heads. The first will be consumed, and no revenue will be derived from it. The second is a distinct asset to the citizens, but always remaining in their possession, it is not available to circulate and thereby increase in value by such means. It will be seen therefore that the capital of a country can be increased only by employment of the third part, or the circulating capital. This is the capital that works, and through turnovers enriches its owners, and through them the country.
Labor.—It is customary to divide labor into two classes, productive and non-productive. Productive labor only can make a nation rich and powerful. Non-productive labor is pure loss as far as accumulated wealth is concerned, yet certain non-productive labor is necessary, as, for instance, that employed in maintaining the implements for national defense, the arts, etc.
It is clear that the capital used in production must first be replaced before any revenue can be deducted, otherwise, available capital will diminish. Therefore, that part of the produce of labor which goes to replace capital spent must naturally again be employed in productive labor. When a person employs his capital, he naturally expects it both to replace the capital used and give him a profit. To do this, he must employ it in productive labor. The gross receipts from the use of this circulating capital should be divided into two sums: the first, and always the larger, gives back the capital used, and the other sum is profits. A person who continuously uses that part of his gross receipts that should go to replace his capital spent in employing non-productive labor will in the end arrive at poverty, for after each year, his capital will become less until finally he will have nothing.
Circulating capital.—Circulating capital is the friend of productive labor for it maintains such labor steadily in employment. This capital includes the original money or stock and that part of the profits which the owner of the capital decides to put back into the business. Revenue is that part of the profits which he has decided to use for his own entertainment and from which no profit is expected. The proportion between capital and revenue spent in any community regulates the proportion between industry and idleness among productive labor. When a greater proportion of revenue is being spent, in most cases, it goes to support nonproductive labor. Many of the purchases of revenue may be the product of productive labor, yet the employment of this wealth, in not increasing the capital available to employ productive labor, will, in the end, harm production.
The employment of capital.—The circulating capital of the citizens of a nation may be employed in four different ways: viz.,
- In raising or procuring the raw materials required for the use of the citizens of the nation.
- In manufacturing and preparing this raw material for use.
- In transporting either raw material or articles manufactured from it from the places where their demand is less to where their demand is greater.
- In retailing goods direct to ultimate consumers.
Kinds of trade.—The transportation of raw material and manufactured articles from those places where they are in abundance to places where they are wanted is the business of wholesale merchants, and this may be reduced to three different kinds of trade: i.e., (a) The home trade. (b) The foreign trade of consumption, or the import and export trade. (c) The carrying trade.
The home trade buys in one part of the country and sells in another part of the same country. It is exemplified where articles are purchased at a distance from a great city for sale in that city—articles manufactured in one city are carried to another city where no such articles are manufactured or else manufactured in insufficient quantities to supply the demand. Home trade includes both the inland trade and coastal trade.
The foreign trade of consumption is employed in buying foreign goods for consumption in the home country, or in exporting domestic goods for sale in a foreign country.
The carrying trade is employed in carrying the surplus production of one country to another.
The foreign trade of consumption, commonly termed the import and export trade, and the carrying trade do not increase the wealth of a nation as quickly as does the home trade. Circulating capital seeks a quick turnover and therefore the home trade from which the returns come in frequently—as often as three or four times a year—is most advantageous to capital, and it will absorb this trade to the saturation point before it will look around for other outlets. Only after the saturation point has been reached will capital of its own accord seek other employments. The capital of England long ago began to seek other employments, for its home trade had reached a point of saturation where to employ a greater capital would have put capital in the country in violent competition and greatly decreased the profits of all capital so engaged.
Foreign goods for home consumption frequently are purchased with the produce of domestic industries. In other cases, they are Purchased with money and also with some other foreign goods. J'he latter must have been obtained either through the exchange °f domestic goods or money. The method of carrying on this unport trade, or foreign trade, does not alter the principle involved, but merely delays the returns to the capital employed. Circulating capital employed in the home trade of a country gives encouragement and support to a greater quantity of productive labor in the country and therefore increases the value of its annual produce much more than an equal capital employed in the import and export trade. The capital employed in the latter has a still greater advantage over an equal capital employed in the carrying trade.
Foreign trade.—When the produce of any particular branch of industry exceeds the demand of the home country, the surplus must be sent abroad and exchanged for something for which there is a demand at home. This trade is a part of the foreign trade of consumption and is known as the export trade. Without this trade, a part of the productive labor of the country must cease and the value of produce diminish. By exporting surplus goods to foreign countries and exchanging them for something in demand at home, this surplus acquires a value which it would not have otherwise, and this increased value compensates the labor and expense in producing this surplus. It is said that the amount of wheat exported determines the value of all wheat raised by the farmers.
In some countries so much surplus goods are exported that the imports bought with them are beyond the needs of the home country. The surplus imports beyond the needs of the home country therefore must be exported to another foreign country and sold for money or for some other articles for which there is a demand in the home country. Here is the basic reason for “Free Ports” within a protective tariff nation.
When the capital of any country increases to such an extent that it cannot be profitably employed in supplying consumption and supporting the productive labor of that country, the surplus part of that capital naturally goes into the carrying trade and performs useful service to other countries. The carrying trade is said to be the symptom of great national wealth, yet it is not the cause of great wealth. Capital chooses the carrying trade only after being crowded out of the other two trades. It is the least productive for the nation, yet it is the safety valve and governor in the economic life of the nation.
It has been a common belief among political economists that the foreign trade—import and export trade—and the carrying trade are not as immediate in increasing the wealth of a nation engaged in them. In the home trade, profits come in frequently, but in these days of fast freight steamers and railroads and with our universal credit system, it is thought that the result has been to place the whole world within easy reach of a nation and make foreign trade quite as profitable as the home trade.
Naturally, capital will prefer to invest itself at home as long as there are adequate profits, and besides, there is always greater risk when capital goes where the laws of the home country cannot go along with it to insure it against fraud or confiscation. The home trade having reached nearly the point of saturation, then for more capital to compete with the capital already circulating would naturally enough lower the interest to be paid the capital first in use. There is also an attraction toward foreign investments in the high return of interest charged and profits expected, especially where the home government has let it be known that such investments will be protected.
A nation should make certain that all of its circulating capital finds employment—first in the home trade to the point of saturation, and then in the foreign trade to carry away the surplus to prevent its being thrown on the market, thus reducing the value of all production and with it the wages of producers.
Capital employed in the foreign trade of consumption is replaced with a profit and this increased capital continues to buy foreign goods for import into this country. The capital then employed in the import trade does not give employment to our own productive labor except indirectly. The foreign country receives the profit of this capital in maintaining its productive labor—not in cash, but in credit—and the foreign country employs this credit where it will give the greatest advantage. It may happen that this capital then will give employment to productive labor in our country as great as if the same capital was employed in the export trade. In other words, our surplus is transported to foreign countries and there exchanged with articles for which there is still a market in our country and in which production is not sufficient.
The carrying trade is said by political economists not to increase the productive labor of the country, but again, this does not hold today in view of the universal credit system. American capital may be employed in exporting goods to France from Spain and vice versa. The capital involved keeps in employment productive labor in both France and Spain, but in a trade between two foreign countries, those countries are enriched sufficiently to buy goods from us, so indirectly the carrying trade does increase our productive labor and therefore the wealth of the nation.
Political economists also believe that government should not give encouragement to one trade above another. They thought that capital would flow naturally to the trade that is the most profitable. But in these days of keen competition in trade, some governments give large bonuses to their citizens engaged in foreign trade and allow them other aids which are beyond their power to render themselves; it seems evident therefore that capital needs government encouragement and protection when it embarks upon adventures which appear hazardous. This is done by guaranteeing against loss or sharing the losses with the merchants.
Money and taxable wealth.—The prosperity and stability of a nation depend upon its taxable wealth. Government is maintained by the taxes in money paid to it by its citizens. The ability of its citizens to support their government is measured by the quantity of productive labor finding employment in the country, for the annual produce must be proportional to this quantity, and the profit from this produce forms the greater part of the fund from which all taxes ultimately are paid.
Until quite recently, the merchants of the United States, entrenched behind a sufficient tariff wall, gave their first concern to the home market. Those articles of our manufacture that went abroad did so almost unaided. The foreign buyers, anxious to obtain certain lines of American goods, were willing to buy them in American markets, and usually paid for them in spot cash.
Food and raw materials flowed abroad as water finds its level because the demand abroad was great enough to take them in that direction. Thus far, no exertion, so to speak, was required of our merchants or of the government. The home market was not overstocked. The country was developing so rapidly that its citizens absorbed nearly all of the produce of its labor. The soil of the United States was like a mine from which wealth was being annually extracted. The government found little difficulty in obtaining sufficient money by taxing the accumulating wealth of its citizens, and these taxes were not considered oppressive by the taxpayers. Labor in the United States was paid wages commensurate with the standard of living established within the country, while competition with cheap labor abroad was avoided by emigration laws and high tariff on imports. Consequently, during these years the United States may be said to have been a hermit nation.
Money is both a measure of values and the instrument employed in commercial dealings. If we have money, we can obtain almost anything we may desire. While the United States remained a hermit nation commercially, neither the true value of its money nor the quantity of it in circulation made very much, if any, difference. The nation’s wealth is not alone in money; in fact, that forms a very small proportion of it. Money is merely the instrument of circulation. While it is true that at one time a larger quantity of money is required to circulate the commercial goods between citizens, and at another time a less quantity is needed, yet, even so, the actual wealth of a hermit nation is not proportional to the quantity of money in circulation, but is based upon the abundance or the scarcity of consumable goods within the country. The rise in the cost of living in the last decade which has caused the great increase of money in circulation did not of itself increase the nation’s wealth.
When a nation ceases to be a hermit nation commercially and sends its consumable goods out of the country, then the real value of its money and securities begins to count. Our goods sent to foreign nations sell for prices measured not in our own money, but in the money of the foreign nation, and the purchasing value of our money in proportion to the value of foreign money measures the extent of our profits. At the moment, the purchasing power of our money in countries abroad is so much greater than that of the foreign money that those countries are unable to buy commercial goods with money, but wish to exchange for them goods produced by their own labor. The value of foreign money within many foreign countries has declined to a great extent, yet not in so vast proportions as when competing in purchasing power with the money of the United States.
Consumable goods made abroad for export to this country are being produced by labor at what would be starvation wages as compared with the purchasing power in that country of our money—yet these wages are sufficient to maintain their own productive labor. The consequence of this is that foreign goods, if sold freely in our home markets, would force our labor to compete with foreign labor so cheap that labor troubles in this country would be inevitable. To prevent this catastrophe, a high tariff is necessary to continue until foreign moneys have risen in value and have a purchasing power in their own country equal to that of our money. (December, 1924)
Great Britain, which has not been a hermit nation commercially for many centuries, is endeavoring to stabilize foreign moneys. The English pound several years ago was quoted at about $3.60 in New York. This is $1.27 less than its true value. This appears to have been in no way disconcerting to England because that country had not the slightest intention of allowing her pound to compete with the inflated value of the American dollar. England’s credits were paid where possible in exported goods or goods purchased in foreign countries and imported into the United States. Also knowing that a high rate of exchange in her favor between herself and certain of her customers throughout the world would retard the development of her foreign trade upon which her life depended, she systematically organized credit systems throughout the world. In exchange for this good office, she has received considerations and privileges that have permitted her to regain that place in the world’s trade which she must have to continue as the mistress of the seven seas. It will be noted that at present the value of the pound has risen practically to par.
When capital becomes interested in foreign trade.—It becomes quite evident to the citizens of our country in case any branch of industry produces more than can be consumed, for this state of affairs is at once met by shutting down industrial plants or by reduction of hours of operation. Until we are able to find a profitable market for our surplus produce a large part of the productive labor of the country must be thrown out of employment.
The large volume of capital in the United States makes it ever increasingly difficult to find profitable employment for it. After supplying the consumption of the nation by supporting the productive labor employed in the country, there is a surplus of capital. It is believed that the saturation point in home trade has been reached and that capital is feeling its way to the normal outlets, the foreign trade of consumption and the carrying trade.
Being faced with the necessity of exporting our surplus of manufactured articles, and with capital seeking to embark in the export trade and the carrying trade, it is quite logical that we as a nation should turn our thoughts toward the sea, for the nation is hemmed in by the sea barriers on two sides. Our produce must be embarked upon the ocean to find a market sufficiently profitable to replace the capital and with a profit, and thus to continue to increase the quantity of productive labor employed in the country. If productive labor does not increase, then the nation will either stand still or go backward in national wealth.
Highways are built on land for the easy transportation of merchandise. Ships are the highways of the sea. When we have built our ships, we have at the same time completed the highways across the ocean to the market beyond. In the markets across the sea, all nations theoretically meet on a common footing, but the prize of foreign trade goes today, as it has in the past, to the nation capable of winning it.
In accounts of the rise and fall of nations, we discover in each case a conflict between the two most powerful nations over the control of a trade terminus. Trade is a conflict between nations. War was always in the past the final arbiter in reaching a decision. The time has come when the nation must embark on the sea or in other words maintain its own merchant marine. To a nation having reached our present status of wealth and opulence, a merchant marine is said to be second only in importance to its soil. Merchant ships are also valuable instruments toward national defense. They supplement and render effective sea power. The United States Government today owns about 1,500 ships with a gross tonnage of 6,000,000. Our citizens own 1,900 ships of a gross tonnage of nearly 5,000,000—about 11,000,000 gross tons flying the American flag. If our circulating capital is to follow the fundamental rules of economics, then it stands ready to invest in foreign trade provided the investment is safe.
All political economists agree that the free use of circulating capital is the greatest civilizing factor in a country. To abridge the use of capital, we throw out of employment a portion of our productive labor, and by so doing, in turn, reduce the amount of capital to be used for production. The production of capital then is the production of labor. Without labor, capital is of no value. Production—labor, is the aim of a nation, capital is the means.
Labor and property.—The assets of a nation are said to consist mainly of two things, labor and property. Labor is alive, human; property is inanimate. In the development of governments, the original reason for the protection of capital has been lost sight of. Capital receives protection because labor is dependent upon it. Therefore, in the protection of property, or capital, a government renders service to labor, for upon capital, labor will always be dependent. There has grown up an idea that labor defines only those who work with their hands, and that all production is the child of mere muscle and brawn. This conception is totally untenable, as Bolshevik Russia has found to its sorrow. Both skilled and unskilled labor are helpless to produce unless they form part of an organization containing the fundamentals of management, planning and administration, by the aid of which the wealth of knowledge of the world is added, and labor’s hands guided scientifically in production. Labor actually comprises that of brain as well as that of brawn. Each is indispensable in production. To divorce them, production will disappear and wealth will vanish. Therefore, the protection of property is not our chief aim. The protection of labor is our chief aim. This is an important fact and it would be well if nations emphasized it in the administration of their laws. Property is protected for labor’s benefit. Human things are vastly more important to the nation than the tools with which they work.
The most difficult situation facing the nation is that of maintaining its merchant ships. American labor—the man, hesitates to embark on the seas. He fears to trust himself beyond the support of his unions. He realizes that many of the laws affecting labor have been built upon the conception that property should be protected at the expense of labor.
This armed neutrality between labor and capital is a menace to the nation’s continued prosperity. There is a danger of a great part of our circulating capital withdrawing itself from production and becoming unavailable for the use of productive labor. Labor and capital are interdependent and should realize it and our laws should be framed clearly upon the principle that in the protection of property, the aim sought is the protection of productive labor. When a nation fully understands these fundamental laws, and all legislation is guided by them, it is certain that the nation’s manhood will return to the sea as it did in the nation’s infancy.
Instruments of foreign trade.—That nations in their diplomatic relations are vitally concerned with trade is too evident to require demonstration. History will show that trade has been the cause of the greater number of international disputes. Often-times the issue has been clouded so adroitly in diplomatic camouflage that the fact has been difficult of recognition. Foreign trade is a complicated affair, mysteriously involved in ships, trade-routes, terminal ports, wharfage, warehouses, commercial firms, capital, banks, freight rates, insurance, port facilities, fuel, and many other factors almost too numerous to mention. There is, however, an old adage that for a nation to win a foreign market, its merchandise must be controlled from the source of the raw material to the final step of placing the finished articles in the hands of the foreign buyers. Here is a many-linked chain. It has been demonstrated in this country that, having free access to raw materials, and dock-yard facilities and labor, we can build a fleet of merchant ships. This is an important first step in acquiring a merchant marine. But what is to prevent these ships from lying idle, swinging at their anchors, long rows of ugly, rusty hulls, in the currents of our rivers?
Our situation is this: Raw materials, manufactured articles for trade, and ships to carry them to a foreign market are controlled by our citizens, but we now find that this is not enough to give us commercial independence. Our citizens and our capital must own and control the entire cycle in order that no impediment can be put upon the free passage of our goods. If our foreign trade is to be profitable, the ships must voyage to distant markets, unload promptly and cheaply their merchandise, and refuel, refit, and return with their holds full of other merchandise for our own market or another foreign market across the sea. Our citizens and our capital must go as pioneers into the foreign fields of endeavor, beset with many difficulties. They will find others there, citizens of foreign nations—of competing nations—who will eye them with suspicion and jealousy—resenting their coming to cut into their profits. And on these distant shores, quarrels over trade must, if history is a guide, frequently occur between the citizens of the various competing nations. In these disputes, in the past, nations have been unable to resist the temptation of interfering, and in consequence, the Navy, the long arm of a nation reaching across the sea, came into usage upon the assumption of insuring fair play, backing up and supporting its citizens abroad in the peaceful pursuit of foreign markets.
For a correct economic balance, a commercial nation should buy foreign goods as well as sell to foreign consumers. A large volume of selling, or exports, with an inappreciable desire to buy or import, causes a depreciation of foreign credits, automatically raising the cost of our merchandise in foreign markets. A purely selling nation inevitably in time will shut itself out of a foreign market by reason of the higher price of its goods, permitting its competitors to control the field with their cheaper articles of trade.
Great sea powers in the past have maintained their share of the markets of the world by the use of their warships, potentially in peace, but dynamically in war. The principle thus has been established that a merchant marine is the cause and justification of a navy. Many examples can be found in the past, the quite recent past, where a superior sea power has driven its foreign competitor out of foreign markets and secured a trade monopoly for its own citizens.
The dictum that a strong navy is a preventative of war might be traced to the fact of foreign commerce, for weak sea powers do not attack strong sea powers to obtain their share of foreign trade, but on the other hand, strong sea powers have frequently gone to war against weak sea powers, and through the destruction of the warships and merchant ships of the enemy have gained dominance over rich foreign markets previously held by that enemy. A strong navy in the possession of a nation with a will to peace is a protection against war.
At this moment, there is hardly a national need more pressing than foreign commerce carried in our own merchant ships. Stimulated export and import would help every industry; the farmer, the manufacturer, and the miner. It would stabilize the economic condition of the country. The farmers of the country are finding their products will not render them fair profit, while the home consumers of the farmers’ production are paying at a high rate for their food. Not long ago, our farmers were burning corn for fuel, finding it cheaper than coal; yet every country in Europe and Asia required the American farmers’ products, but could not obtain them. The manufacturers and miners have slowed down production to prevent the home market from becoming saturated with their commodities and to keep up prices to the ultimate consumers. Many laboring men are still out of employment because of this retardation. Foreign nations need our goods, but there does not exist machinery to start the flow of exports toward them or their imports back to us. The steam to drive the engines of our foreign commerce must be supplied by our circulating capital. There is no lack of money or credit for work within the nation, but there is little or none willing to be used in building up our foreign trade.
Protection of foreign trade.—It is the belief of students of history that foreign trade must be protected by governments. When the Mediterranean Sea was the only known large body of water and the merchants of Venice, Egypt, Phoenicia, Rome, Carthage, and other ancient sea powers were competing in foreign trade, these merchants found that when their country’s sea power was destroyed their foreign trade was lost. Merchants of weak sea powers obtained protection from stronger sea powers, sending their goods to foreign markets in merchant ships of the latter powers. Since those days, the idea of the warship for protection of oversea commerce has become an established belief. History in each century since that era has confirmed this belief. Before the World War, our foreign trade paid tribute to other nations in freight rates. Foreign merchant ships in large measure took our exports and brought to us our imports, This tribute aggregated many hundred millions of dollars each year. These foreign nations are still willing to perform this service. Today, we own a great merchant marine. The markets of the world are ready to receive our goods. Yet, our merchant ships lie idle, at a great expense to their owners.
Tradition is a moving force in men’s minds. Those who have amassed capital hesitate to risk their holdings beyond the protection of their own government. Can this government protect its foreign markets where the doors are open or are slowly opening, and where there is a great—and soon will be a greater—demand for all those things which this nation can supply?
Competitive naval armaments.—In 1920, it seemed evident that the conditions among the great naval powers were paralleling those before the World War. The United States and Japan had laid down a very ambitious program in naval construction. The United States especially had fallen behind in battleship construction due to its efforts in other directions during the progress of the World War. The power and size of the fleet of Great Britain at that time was sufficient to maintain its traditional boast of the mistress of the seas. However, the navies of the United States and Japan, when their programs were completed, and provided no other ships were laid down by England, would take away a great deal of the British margin of superiority. In fact, the American fleet, under the 1916 program, in battleships alone, would have given the United States a theoretical superiority in post-Jutland ships, both over England and Japan. Statesmen saw in this situation a menace to the peace of the world, and to stop competition in naval armaments a conference in Washington was called to discuss limitation of naval armaments.
The four-power treaty, the limitation of naval armaments and other agreements reached by this conference are now supreme law of this land. The pacts, if literally carried out, although not actually abolishing war, should go a long way toward preventing unnecessary wars. Open and frank consultations between powers in the event of an international crisis in the Pacific should be able to arrive at a solution by other means than by force of arms. In agreeing to these treaties, these four competitive industrial nations were each forced to make some manner of naval strategical sacrifice. The sacrifices were not algebraically equal. The geographical situations of the several nations made it imperative that certain of them were called upon to give up more than others. The relative quantity of sacrifice of each nation also may be said to represent the earnestness of that nation to make the conference a success.
Japan made the smallest sacrifice. This mostly was due to the fact of its geographical situation, for that nation’s military and naval power is concentrated at the strategic center of the area known as the Far East.
America agreed to remove itself from a theoretically strong position in the Philippines and Guam, and retire its naval power behind the fortifications of Hawaii, 3,500 miles from the Japan coast. Those initiated knew that this sacrifice of America was but a promise for the future, for the United States had actually given up some years since its potentially impregnable positions in the Orient by refraining from developing a modern naval base in its far eastern possessions suitable for its fleet in the event of war in the western Pacific. America’s sacrifice amounted, therefore, merely to giving public sanction to continue this inactive policy of developing naval power in the Far East. The Congress seemed to have no intention of spending large sums of money for such a purpose. The advantage to Japan of this definite understanding, however, was of great moment. Japan professed in her press a fear that some day America would awake to the advantage of commercial and naval bases in the Far East; that Guam might develop into a second Heligoland, and that Manila might be created into a Hong Kong, with the addition of being modernized to care for not only a large active merchant marine, but also the largest super-dreadnaughts. This apparent fear of Japan was but a reflection of its own mind, for it seems certain from her history that if the two nations were reversed in position, both the Philippines and Guam would have long since become impregnable naval bases for a fleet. Militaristic Japan would not have allowed them to remain so long unguarded. The advantage to Japan, therefore, of the official understanding that the United States would not improve its far eastern bases was of great moment. It gave Japan something tangible. Once America agreed to abandon the possibility of a great naval base in the Far East, then Japan needed no longer to consider the menace of America’s sea power in her own naval and commercial expansion in that region. This was a distinct gain to Japan’s foreign policy.
England agreed to remove her sea power to Singapore, about 3,000 miles from the Japanese mainland. Hong Kong, lying only 1,800 miles from Japan, by the treaty is to lie fallow for future naval purposes. At least, its gun defenses and facilities for a fleet base are to be permitted to become obsolete through the passage of time, which amounts to the same thing. This retirement of England behind the defenses of Singapore removes for Japan the menace of the British fleet in her own waters.
France sacrificed little or nothing, for her naval power has never been a factor in the Orient.
In the actual scrapping of capital ships, Japan’s sacrifice was small compared to that of the United States, while England merely sacrificed her plans, as no new capital ships were building. To sum up the sacrifices in the Limitation of Armament Treaty, Japan sacrificed a few ships and there is the end of it, while America not only sacrificed what would have made her a great sea power, but further denied herself for all time the power to use safely her capital in developing the resources of the Orient. Great Britain sacrificed no warships. She consented to equality in tonnage of capital ships with the United States, but knew full well that for years to come, she could be assured that her fleet would be superior in fighting power, more fully manned and trained, than the American fleet. British statesmen seem to have been right in their psychology.
American thought seemed to consider that the spirit of the treaty limited all types of naval ships, even though the text of the treaty placed a limitation only on capital ships and airplane carriers, and since the treaty no new ships have been laid down by America. Japan, on the other hand followed the letter of the treaty, and for reasons explained in the Japanese press, to give employment to labor at dock yards, used the money saved on battleship construction to increase other types of warships not limited by the treaty. In consequence, Japan has more than doubled all other types of warships in the last four years, thus giving her a great preponderance over America in fleet strength. Some in this country seem to blame Japan for these acts, but she was merely following a well planned policy of naval expansion curtailed in only one direction by reason of limitation of battleships. When one considers that the fighting power of a fleet, resting primarily on battleship strength, is rendered innocuous by a weakness in the auxiliaries or weapons through which the nation’s might on the seas is exercised, such a great increase in auxiliaries as has been made by Japan is in effect an increase of the number of capital ships. It is of greater importance than the elevation of guns. The light cruiser, the destroyer, the submarine, and the airplane, are virtually as much a part of the armament of the capital ship as is the gun. A battleship cannot use its guns and torpedoes effectively without the aid of these auxiliaries. To increase or decrease the number of auxiliaries of a fleet increases or decreases the potential power of its battleship. Therefore, Japan, by doubling the number of its auxiliaries, has in effect increased the fighting power of its battleships. No arithmetical calculation based upon conventions can conclusively show the true increase of fighting power consequent upon an increase of auxiliaries, for these auxiliaries are capable of being utilized in many services outside of a fleet action where their work will act to defeat the strategy of an enemy and destroy its power for sustained war operations. When we consider our country’s commercial interests and its possible expansion to employ our capital, our relative weakness in auxiliaries looms large.
England, influenced by her naval tradition, will look to the effectiveness of her fleet, for she has lived by that fleet for centuries. Japan, an oligarchy, a nation of limited suffrage, guided by a highly trained general staff, has given scant heed to the voices of sentiment dealing with disarmament.
America, the idealist, a nation of over 100,000,000 people that within a year put 5,000,000 men in the field and spent over a quarter of a hundred billion dollars to defeat militarism in Europe, had become a monster of uncertainty to the Japanese press. They did not fathom the psychology of so much professed virtue. The most obvious thing was to cut this nation off from crossing the Pacific with its crusaders. This has been effectively accomplished in the treaty.
The disarmament conference was successful because the results were dictated by America. We sacrificed our commercial hopes for the future to arrive at an agreement for disarmament. Unless we succeed in creating a world conscience, outlawing war, and submitting all questions to arbitration, we shall suffer in our foreign trade through our naval weakness. If the pre-war ideas should remain, we shall find ourselves virtually cut off from the markets of the Orient, and find barriers raised in foreign quarters against the entrance of articles of our production. The United States may therefore soon have to return to its old time position as a hermit nation commercially, give up the sea, and retire within its frontiers. The one outlet for trade possible for a nation with a weak sea power is, in our case, the American continent, and this can be achieved by better transportation facilities by land to the countries of South and Central America.
The battle cruiser.—The American Navy always will mourn the absence of battle cruisers in its fleet. Lacking this type of warship, it becomes a duty to supply in some other type a means of minimizing this advantage of other sea powers.
Sir Julian S. Corbett, in his first volume of the series Naval Operations, gives an illuminating account of the fast German commerce raiders. At the beginning of the World War there were two armored cruisers and ten fast cruisers operating against England’s far-flung merchant fleet. These dozen ships, subsisting upon resources captured, and destroying every enemy merchant ship encountered, became a serious menace to the British vaunted control of the sea. It became an imperative task for England to run down and destroy each of these raiders. Sir Julian reports that at least five battle cruisers, four battleships, twenty armored cruisers, ten light cruisers, and a considerable number of converted merchant ships were employed at one time or another on this duty. The damage accomplished by these speedy German ships at large on the trackless ocean was great and the last ship was not run to earth until four months after war had been declared.
In reading the official records, one is seriously impressed by the almost insurmountable difficulties in communication experienced by the admirals in command of the British searching squadrons and ships. With all the advantages of their own, allied and neutral cables and wireless stations, important information to them was hopelessly delayed. Many vital messages were received by the British leaders too late to be acted upon or so late that when measures were taken, the enemy was far out of reach. One thing stands out most strikingly—the British Navy’s unpreparedness to cope at once with such a situation.
Battle cruisers accompanying scout cruisers with long radius of action would be far more effective today than the vessels that Germany utilized for raiding. Such a squadron, its ships acting singly but within supporting distances, would be a power that could not be overcome by the American Navy. It could overwhelm any force fast enough to come up with it.
When battle cruisers lie in the battle fleet, they act as a fast wing, but should the battle fleet be not menaced by the enemy’s battle fleet, the battle cruisers become available for eccentric missions. It seems unnecessary to dwell at length upon the possible use of battle cruisers upon an extended line of communications. With these rovers on the seas, a long line of communications to our fleet would be practically impossible. Convoys escorted by battleships sufficiently strong to cope with a concentration of battle cruisers would become imperative, but this would force this country to divide its forces and that might entail defeat in detail.
Should our merchant ships carrying our products be spread over the seven seas, with what shall we protect them from raids of a like force of warships? England used nearly seventy fighting ships to run down twelve lightly armed German raiders. What type have we at hand to prevent battle cruisers of an enemy from driving off the seas if not destroying our entire merchant marine?
The aim of modern war.—Modern war is aimed not at armies and fleets, but at the nations behind those instruments. In battles between armies, the object of opposing generals is to cut off the enemy’s lines of communication. Cutting these lines of communication forces an army to retire in order to establish new lines of communication. An army with lines of communication in the hands of its enemy cannot fight, for it would soon run short of ammunition and food. A fleet’s lines of communication are just as tender.
To accomplish the defeat of a nation, modern strategy aims at cutting the lines of communication of the enemy nation, that is—to shut it off from all commercial intercourse with the outside world. Few nations can manufacture everything that is required in war, and fewer produce sufficient raw material and food-stuffs to support the civilian populace and its fighting forces. Even when a nation is opulent as we find ourselves today, it will require the continuous operation of its sea trade with neutral nations. Such trade often is the life blood of a nation at war. By this trade flow the surplus articles of manufacture and surplus food and other things, the return stream bringing gold or credits from the outside world. By trade, the nation’s credit is maintained. Nations at war must strive to maintain the volume of trade as during peace. The very same economic factors are involved. If Germany had succeeded in cutting the lines of communication of Great Britain, that nation soon would have met defeat on the seas. In our case, we might manage for some time—possibly years—but what would be the effect upon our finances? Financial ruin would be rife in the land. A body blow would have been struck at the nation’s morale.
At the height of her power in 1914, Germany owned five battlecruisers and some thirty fast cruisers. Great Britain at the same time had ten battle cruisers and some fifty cruisers. Consider the havoc the German battle cruisers and cruisers might have accomplished if they had gotten safely to sea, and then have raided the sea lanes converging toward where the titanic land struggle was being enacted in France and Belgium. What prevented this terrible catastrophe from occurring? It was not the British battleships but the ten battle cruisers under Admiral Beatty that closed the gates to the open seas. If Germany had had superiority in battle cruiser strength, our Army in 1917-18 could never have been transported to France. Can we wonder now at the great concern of Great Britain after losing in a single battle three battle cruisers? By one stroke, from a superiority of five, England’s superiority dwindled to a superiority of two.
The lesson in all of this is that we learned too late the terrible value of speed in our capital ships. The value of speed with power is great tactically, but strategically it is commanding. Our peace maneuvers have shown the importance of a fast wing and the difficulty of meeting it with anything but speed. Against this power, tactically or strategically, what have we to oppose?
In reading the Crisis of the World War by Winston Churchill, one cannot but be impressed with the belief that the World War, or at least England’s share in it, was made certain by the psychological attitude of the British nation and the British Navy, beginning when Germany laid down its first naval law. This attitude became an idea and then crystallized into a certainty that Germany meant war. The eyes of England were ever turned fearfully upon this budding naval power and this idea became a conviction at least as early as 1912 when Churchill became first lord of the Admiralty. A similar conviction undoubtedly was in the minds of those who advocated the Washington disarmament conference. To stop competitive warship building that had produced the World War for England was the object. We now appreciate that that object was not quite reached and the failure to achieve full success was due to the fact that no nation except the United States was willing to accept an entire navy cut to a definite size and pattern.
Competitive warship construction between rival commercial nations must in the end, if history is a guide, lead to war. There can be no gainsaying this. Yet, on the other hand, how will a nation be able to know that all goes well with its, navy unless some comparison with a possible enemy is made? A nation might lay down a program of warship construction in the belief that the numbers and sizes are based upon purely defensive factors. Yet, every defensive warship must, when war comes, be used offensively if success is to be achieved. The spirit of the offensive in war is half the battle. Therefore, in estimating the size and power of our Navy for defense, we must measure it against those navies with which our Navy may some day come in collision. Unfortunately, there seems no other way.
The submarine.—It has been stated often that the submarine is the weapon of the weaker naval power and that it is a purely defensive weapon. This might have been true before the art of submarine construction had developed a subsurface vessel nearly as large as a light cruiser, armed with as heavy a gun, carrying both torpedoes and mines, and with a cruising radius capable of crossing the Pacific or Atlantic several times without refueling. A fleet of submarines of this type, efficiently manned, well based, and well supplied, must act as a great deterrent to another nation not so well provided. This is conceived to be the weapon best adapted to our strategical situation. It cannot, unfortunately, protect our merchant marine, but it would be an effective opponent on the sea and could destroy the lines of communication of an enemy.
It is now well known that the submarine, as a weapon in the World War, was not defeated. Again, the dictum that “ships do not fight, but men.” was proved. The personnel of the German submarine service suffered a breaking down of morale and this acted to defeat the submarine on the sea for the time.
The battleship and battle cruiser cannot fight the submarine for they live in different mediums as it were. It is foolhardy for a big ship to remain in the vicinity of a submarine submerged. Its location is not known and the big ship is helpless to avoid a torpedo when fired at short range.
Battleships and battle cruisers, the monarchs of the sea, are as helpless before the submarine as a prize fighter is helpless before a burglar with an automatic pistol drawn. The prize fighter cannot dodge a bullet. In the World War, the German submarines concentrated in their operations upon the foci of trade. England’s answer was characteristic of her traditional sea strategy—a concentration of surface ships at the foci of trade, but although in the past this method had been successful, it failed signally with the submarine.
An enemy that fights in the open on the surface can be met and defeated by a superior surface force, but one that lurks beneath the sea cannot be subdued by those familiar means. A new up-to-date method of attack was necessary. A well known principle was being applied in the old way without appreciating that although the principle was applicable, yet the method of its application was faulty owing to the changed characteristics of the enemy.
The convoy system was the remedy at this time. This method collected all merchant ships into a compact body easily guarded by fast warships. The convoy method could not prevent merchant vessels being torpedoed, but it forced the submarine to come to the convoy where the ships to fight the submarine were concentrated. Once the submarine had fired its torpedo and betrayed its position, then some offensive action was possible. The destroyer laying a depth charge barrage was the weapon most efficient in this fight against the unseen power.
The submarine cannot gain command of the sea against a superiority of surface warships, but it does make such command precarious and doubtful. It cannot be blockaded as readily as the surface ship. Its mere presence on the ocean forces all vessels to expend nearly ten per cent additional fuel in zigzagging.
Our mercantile policy seems to be heading toward the idea that American goods should be carried in American ships. Our surface war fleet possibly will never be sufficient fully to protect a merchant marine capable of carrying our trade. In expanding our merchant marine, we should be particularly cautious as to our methods and the extent of that expansion. We must realize that the life blood of the British Empire is its merchant fleet; that anything that injures or decreases the success of that fleet, by that much decreases the virility of the British Empire to hold itself together. Every nation will fight for its life, even against a brother. Peace between England and America should be a fundamental policy of both countries. National friendships are based, not upon consanguinity, but upon interests. Interests naturally are often conflicting, but if the will to get along is fundamental, this will guide policies along the narrow path of peace.
Should the United States acquire a formidable fleet of cruiser submarines, it will have a powerful argument in settlement of disputes by other means than war.
Many believe that the submarine is the coming type of capital ship. This was Sir Percy Scott’s dream and no great stretch of the imagination is necessary to picture a submarine battleship or semi-submersible battleship of high surface speed, carrying weapons of the largest caliber. The evolution to this will come if it does at all gradually and progressively. Is the submarine the answer of the United States to the battle cruiser menace, and cannot it be instituted without arousing the monster of competitive armaments? Other nations may have already arrived at this same conclusion. The fact that one nation has built over a score of these large submarines since the Limitation of Armament Conference seems to point to such a conclusion.
The capital ship.—There is constantly recurring the thought that the battleship is doomed and that nations should not build any more of this type. The principal arguments advanced against the battleship concern developments of the airplane and the submarine. To replace the battleship, the naval doubters advocate airplane carriers, while the most radical of the Army critics go the whole distance and advocate airplanes and submarines only. It would appear that these prophets confuse the means with the end in naval warfare. The end in naval warfare is the control of the sea highways, and the means are the weapons employed for the purpose. The naval airplane as yet is dependent upon a floating base and these bases are supplied by airplane carriers. Airplane carriers are to all intents and purposes battle cruisers with airplanes replacing the big guns in armored turrets. They will be subject to attack by gun fire, mines, bombs, and torpedoes. Meeting a battle cruiser, an airplane carrier must rely upon its airplanes first, and then its speed. A single battle cruiser without air defense might fall a victim to airplane bombs, and this possibility must be met by aircraft defense inherent within the battle cruiser—guns and airplanes. Meeting a similar type of ship, a duel will be fought first in the air, but in the end, the ships themselves may fight, and other things being equal, the one with the bigger or larger gun armament will win. If navies should scrap their battleships and battle cruisers, replacing them with airplane carriers, and if evolution is not stopped by agreement between nations, we shall find that airplane carriers soon will be “dressing themselves up” with big guns.
The fact is that the naval airplane is merely a new sort of projectile, carried by a surface ship. It must obey the law of gravity. Eventually, it must come down from the air and must have a place to alight or else be lost.
The air is without limits and the entire control of this medium is for any one nation in war a difficult task. The sea is almost without limits. Commercial nations have fitted up strategic localities to be used as points of support for their warships in winning control of the sea, and the big surface ships, concentrated in fleets with their auxiliary weapons, are mobile points of support for the same purpose. We must bear in mind too that the medium of the air is too light to serve except as a medium of limited transportation. Merchandise will always be transported more cheaply on the sea. The bulk of the world’s commerce will be carried in surface ships.
The idea that the airplane carrier will replace the battleship can be translated into meaning that the battleship will have added to its armament airplanes and more airplanes as their reliability increases. The latest design of battleships for Great Britain use the entire after part of the ship as a flying-off deck, all turrets being forward. The battleship may merge into a battle cruiser and the battle cruiser may merge into an airplane carrier, that is, it may carry more airplanes than guns, but the basic idea of the mistress of the sea being a large, heavily gunned, high speed, reliable fighting ship is as fundamental as ever. A fleet of such vessels, reinforced by all types of necessary auxiliaries, which are actually an extension of the armament of the battleships or battle cruisers themselves, will constitute the main fighting power on the sea, and will be able to fulfill the mission of destroying the enemy’s warships, his merchant ships, and protecting its own commerce during war. As the airplane increases in reliability, in radius of action, and in carrying power, the number of airplanes in the battle fleet will increase. The characteristics and armament of fighting ships of all types will conform to the known destructive power of the new weapons. The belief that a revolution in type is upon us is merely a dream of those who but touch lightly the high spots of history. They speak without full knowledge.
Nations conquered nations first with armies. Ships in these earliest days merely offered the means of transport for fighting men by water, thereby saving many miles of travel through hostile country wherein roads did not yet exist. The object of these wars was plunder. Later, trade between nations sprang up when easier means of transportation between them was established by roads and by ships. Cupidity yet actuated nations to wage war upon one another to gain the rich trade of a rival. Originally, soldiers manned the ships that carried the fighting men, but when sails came into use, rendering greater distances by water possible, a new art or science gradually came into being, that of seamanship. Seamen thereafter manned and navigated the ships while the soldiers fought the ships if occasion arose in transit. Ships carrying goods for trade were manned entirely by seamen. For the protection of these trading ships, warships were created. They were navigated by seamen and fought by soldiers. It was not until about the eighteenth century that soldiers on warships were finally displaced by man-of-war’s men, seamen who both navigated and fought the warships. In the sixteenth and seventeenth centuries, the globe was explored by ships fitted out by the militant powers of Europe. The vessels traveled to localities heretofore unknown by the civilized world. In due course, merchant ships followed these explorers and world trade began. The explorers proved to the merchant that great wealth lay beyond the horizon. Since these earlier days, the character of warships and merchant ships have undergone great changes, but the underlying motives have remained the same—merchant ships for trade and warships to keep trade in security wherever the sea permitted transit. The seaman’s profession, comprising as it does many of the sciences, requiring initiative and boldness, and physical ruggedness, is one mastered by a small proportion of the people of the world.
The naval airplane is a limited ship of the air as the submarine is of the depths of the sea. Each, according to its capabilities, must fight for the protection of its merchant ships floating on the surface of the sea. In a sense, each is a missile. One ascends in the air from the surface of the sea, while the other plunges beneath the surface. Each must return to the sea’s bosom.
The strategy of the surface of the sea is binding to both the airplane and the submarine for each must give loyally to the mission —control of the surface to keep the sea open for trade.
War on the sea must, to succeed, be planned. Every weapon must be indoctrinated—know the part it must play. Even a fleet comprising all types of ships is virtually a projectile fired from a base of supplies. It must eventually return to that base for refuel and refit. The base of supply may be likened to a gun. A single ship, a warship, or a merchant ship, may also be likened to a projectile fired from a base of supply. An army on shore likewise is dependent upon its base of supplies and can travel only a limited distance from that base. Lines of communication are the vital factors in war.
Imagine only merchant ships on the surface of the sea, airplanes above the surface, and submarines under the surface and that no other types of warships exist. Imagine further that airplanes have become so completely reliable as to be capable of flying between continents without the support of floating bases. The airplane, from its points of vantage in the clouds, will attack the surface merchant ships of its enemy, its enemy’s bases of supplies, its factories, and its cities. The submarine, from under the sea, will add in the destruction of enemy’s surface merchant ships. Necessarily, this destruction both from the air and from under the water will be reciprocal. Great battles in the air and under the sea between like types of warship will result. Very soon, each nation must consider what it is gaining in this race of destruction. Before either antagonist has won a decided advantage, imagine a large merchant ship, armed with guns and supplied with airplanes, appearing on the sea. It is surrounded by fast light vessels, destroyers. Enemy airplanes sighting the newcomers attempt to destroy them with bombs. From the merchantman’s deck airplanes ascend while a heavy shell barrage meets the attacking planes. A submarine approaches to attack and upon showing its periscope is attacked with a depth charge barrage quickly and effectively laid by the destroyers. Other merchant ships with heavier guns appear, carrying more airplanes, accompanied by more destroyers. These large merchant ships may scour the seas, sinking the enemy’s merchant ships, and with their planes ward off attack by enemy planes. The light fast warships hunt out and destroy the submarines. Finally, the nation with the converted surface warships and destroyers wins control of the surface of the sea. To meet this condition, the opponent must follow suit in arming its own merchant ships. Battles rage between armed merchant ships, singly and when concentrated into fleets. Meanwhile the air menaces continue. There will grow up in the midst of this airplane menace a surface navy with guns, ever growing bigger until both nations, if time permits, have returned to the conditions before they scrapped their surface warships.
A law of which the prophets know not is working mysteriously “to shape our ends, rough hew them as we will.”
The airplane is not the sole weapon for conquest or for defense. It is not a prime weapon, merely an auxiliary one and one most useful on the sea when supported by surface ships.
The big surface ships with all their auxiliaries are the ultimate power of a navy to keep the surface of the sea open and safe for the nation’s use.
The advocates of a united air service speak without thorough consideration of the problem before the Navy. Nations will fight for the control of the air, but this control will be for a specific purpose, and the missions at sea will follow the ancient old laws of strategy and tactics.
Within the recollection of the senior officers of the Navy, the battleship was said to be doomed upon the advent of the destroyer. It was shown that the destroyer could steal upon the battleship at night and that the battleship’s search lights and guns were impotent to prevent the destroyer from destroying the battleships. The anti-torpedo defense guns, or those guns which could be fired quickly could not reach with sufficient accuracy the point from which the destroyers would fire their torpedoes. The solution was to advance the guns toward the point of attack. This predicated taking the guns off the battleship, only figuratively, and putting them onto something else. The decision naturally was to put them on destroyers, and the destroyers in a screen about the battleships was the answer to the destroyer attack upon the battleships. In the same way, when our anti-aircraft guns fail by day or night to form an adequate defense for the battleships against airplane attack, we must advance these anti-aircraft weapons in order to defeat the attacking airplanes. The answer is naturally to mount these devices in airplanes. It seems to be the opinion that the fleet that can control the air over the enemy’s fleet and its own fleet will win, other things being equal. By means of this control we may fire our airplane projectiles while the enemy cannot. Therefore, an important weapon is denied the enemy’s fleet. If a united air service should result from the present agitation, the Navy would find itself denied the absolute control of a weapon in design, numbers and operation, needed both for offensive and defensive action.
Scout cruiser.—The scout cruiser might be called a small battle cruiser. Its uses in winning the control of the sea highways are many and vital. As a commerce destroyer, it has no peer. It also serves in the role of a destroyer destroyer. Armed with airplanes, and supported by battle cruisers or battleships, it can gather information of enemy movements and dispositions, and in the tactical battle, break up a destroyer attack or lead in such an attack upon the enemy.
The quantity of sea power.—The sea highways are our merchant ships flying our flag, carrying our surplus production to the world, and bringing to us the surplus of other nations that are needed in our economic life. A navy is for the purpose of protecting and keeping open these sea highways, in peace and war. The types of naval ships and their development are a purely naval concern. The number of these ships is a national concern. When we insure our house, we insure it for its value. When we insure trade and our economic prosperity, we should insure it for its value. Remember that a fleet that cannot win is in the class with a gun that cannot reach the enemy. The only fleet that is at all valuable is one that can serve the purpose. If in the event of war, the Navy is unable to protect our sea highways, these highways for us will be destroyed; our surplus production will not find an outlet and will be thrown back upon the home market; the vital imports will not arrive; furthermore, productive labor within the country must decrease and men be thrown out of employment; the American dollar will depreciate and, if we lose the war, we also lose our present economic position in the world, our credit, and our self respect as a nation to say nothing of the respect of other nations. From an economic standpoint, the question is—“Is a navy worth while?” And if the answer is “Yes,” it must be a navy equal to our needs and commensurate with the wealth it must guard.