The new Act was based upon the same calculation of the effective life of ships as the one of 1898, and provided that, except in the case of total loss, battleships were to be replaced after twenty-five years and cruisers after twenty years. It was provided that the age of ships was to be reckoned from the grant of the first instalment in payment for the ship to be replaced to the passing of the first instalment in payment for the ship to be built as "substitute" (Ersatzschiff). It was proposed to keep half the battle squadrons--the First and Second--fully manned on a war footing, together with one-half of the torpedo craft and all the school-ships and auxiliary vessels. The Third and Fourth battle squadrons were to form the Reserve Fleet, half the ships of which were to be kept in permanent commission. The Act also made provision for nucleus crews for the second half of the torpedo-boats, for the requirements of ships serving abroad, and for the needs of the shore establishments. More remarkable, perhaps, than the actual terms of the Navy Act was the character of the explanatory Memorandum put forward by the Navy Department.[9] In this notable document occurs the following statement of the new naval policy of the German Empire: "To protect Germany's sea trade and colonies, in the existing circumstances, there is only one means: Germany must have a battle fleet so strong that, even for the adversary with the greatest sea-power, a war against it would involve such dangers as to imperil his position in the world. "For this purpose it is not absolutely necessary that the German battle fleet should be as strong as that of the greatest naval Power, because a great naval Power will not, as a rule, be in a position to concentrate all its striking forces against us. But even if it should succeed in meeting us with considerable superiority of strength, the defeat of a strong German fleet would so substantially weaken the enemy that, in spite of a victory he might have obtained, his own position in the world would no longer be secured by an adequate fleet." The Memorandum well repays study in the light of subsequent events. Almost at the moment of its publication Admiral von der Goltz, a former Chief of the Admiralstab, gave a less reserved exposition of German policy, thus reflecting the opinions held by the naval officers responsible for the character of the proposed expansion of the German Fleet.