The results of the last year have shown the ability of our seamen to get upon terms with the submarine menace and gradually to gain the upper hand. This has been achieved in spite of an imperfect knowledge of a new and barbarous method of warfare and of a scarcity of suitable material. Our material resources for this warfare are already improved and are being rapidly augmented, while science is placing at our disposal means of offense and defense of which we have been in need. [Illustration: WORLD'S SHIPPING LOSSES IN 1917. THE BLACK EXTENSION OF EACH COLUMN SHOWS THE GERMAN EXAGGERATION. THE AVERAGE EXAGGERATION FOR THE 12 MONTHS IS 58 PER CENT.] With regard to the other factor, a rapid and continuous increase in the output of merchant tonnage will inevitably follow the united efforts of all engaged in merchant shipbuilding in this country. * * * During the critical period that confronts us we must rely to a large extent on our own shipyards and on ourselves. Our partners in the war are making every effort to increase their production of ships, but a considerable time must elapse before the desired output is secured. [Illustration: WORLD'S LOSSES OF SHIPPING IN COMPARISON WITH WORLD'S TOTAL SHIP CONSTRUCTION] To produce in the United Kingdom 1,800,000 tons in 1918, and to reach an ultimate production at the rate of 3,000,000 tons per annum, is well within the present and prospective capacity of our shipyards and our marine engineering shops. But the ranks of the skilled men must be enlarged without delay by the introduction of men and women at present unskilled. The education of these newcomers, upgrading, and interchangeability of work are essential, and must be pressed on with the good-will of employers, foremen, and men. It is to insure the vigorous co-operation of all concerned that the Admiralty has recommended the publication of the facts. [Illustration: SHIPPING LOSSES OF UNITED KINGDOM AS COMPARED WITH OUTPUT OF NEW SHIPS] POSITION AT THE END OF 1917 The following table summarizes the position at the end of 1917: British. Foreign. World. Losses 7,079,492 4,748,080 11,827,572 Gains: New construction 3,031,555 3,574,720 6,606,275 Enemy tonnage captured 780,000 1,809,000 2,589,000 --------- --------- --------- Total gains 3,811,555 5,383,720 9,195,275 Net loss (world) 2,632,297 RECORD OF THREE YEARS The following statement shows United Kingdom and world's merchant tonnage lost through enemy action and marine risks since the outbreak of war: