§ The inquiries, which an Intelligence Department must needs make, brought before the Board in forcible contrast the great disproportion between the volume of floating commerce of the Empire to be protected and the force at present available to protect it, compared with the mercantile and war marine of foreign nations. To bring the British Navy and commerce into the same relative proportion as that which exists elsewhere in Europe is neither needed nor practicable. To carry out a plan which, at the approach of war, would immediately convert our fastest and most powerful merchant vessels into effective war-cruisers, and thus turn the assailed into assailants, seemed a natural solution of the difficulty; but there were various obstacles to its realization. The cost of retainers, the difficulty of providing crews and stokers, the delay in the alterations necessary, the contingency that when wanted the vessel might be at the other end of the world—these difficulties in combination deterred previous Boards from making the experiment.
§ The enormous sums spent in taking up vessels in 1885, many of which never left harbour, and the long delay in getting the guns and fittings into the "Oregon," the only vessel thoroughly equipped of all those hired, impressed upon my Colleagues and myself the duty of taking some action in the matter. Exceptional speed and strength are the only desiderata of a mercantile cruiser. It occurred to us that the Post Office expenditure might be utilized, and that if we worked in combination, postal contracts could be associated with conditions by which the use of the vessels carrying the mails might under certain contingencies be economically secured to the State. The revision of the North American contract was a most favourable opportunity for a trial of the idea. The White Star Company, one of the tenderers, had, in August last, expressed their willingness to build two vessels to be approved by the Admiralty, of a speed and strength superior to any merchant-ship afloat, with engines and boilers below water, with fittings for guns built in during construction, and, when manned, with half crews of Naval Reserve men.583
§ In return for their use, the Company requested an annual subsidy which would recoup the owners a portion of the larger outlay the exceptional construction of the vessels required.
§ The Cunard Company, another of the tenderers, has the fastest English ships afloat. A large portion of the officers and men in the employ of the Cunard Company are Naval Reserve men. Their ships are never more than eight days distant from Liverpool, and, therefore, always obtainable at short notice.
§ The Admiralty, after full consultation with the Treasury and Post Office, commenced negotiations with these two Companies.
§ They were influenced greatly by this consideration, that merchant-vessels, when armed, to be really serviceable, should have exceptional speed and coal capacity, enabling them to overhaul the weak and to escape from the strong.
§ Such exceptional speed entails a primary cost in engines and boilers, and a consumption in coal that renders the remunerative employment of the vessel very difficult. Only a few of the richest and best-conducted passenger Lines can afford to build such vessels, and the profits derived from their employment in recent years has been small.
§ Unless some inducement is given by the English Government to continue the building of such vessels, they must diminish in number, whereas abroad, by subsidies, their construction is directly encouraged. It is neither to the credit of the country, nor for the advantage of our Marino, that vessels of this class should mostly be under foreign flags.
§ The arrangement made with the two Companies differs in detail, but is the same in principle.
§ By the payment of an annual subsidy, reduced one-fourth so long as the mail contract lasts, the Government obtain from the Cunard Company the use of the "Aurania," "Etruria," and "Umbria," in time of emergency at a price fixed both as regards hire or sale. The necessary platforms and fittings for carrying guns are to be put in at once; the crews of the ships to be half Naval Reserve men; the owner to take charge of the gun-mountings required. Under this arrangement, it is believed that within a week all three vessels could be fitted, armed, stored, and manned as armed cruisers. The use, at fixed prices, of the remainder of the Fleet, if required, was a secondary condition of the contract.
§ With the White Star the arrangement was practically the same, except that no payment was to be made till the two new ships to be built wore ready for sea.
§ By this arrangement the Admiralty have obtained, at a moderate annual cost, the use for five years of the three fastest steamers afloat, and two even faster, when constructed.
§ Negotiations with the Australian Colonies have for some time past been carried on, which, though not concluded, will, we hope, result in those countries contributing towards an extension of the Imperial Navy, and maintaining, as an integral part of the Fleet, an Australian Squadron, in addition to the force which has hitherto been stationed in those waters.