The present volume is the outcome of a large pamphlet published in Europe at the end of last year entitled _Europe's Optical Illusion_. The interest that the pamphlet created and the character of the discussion provoked throughout Europe persuaded me that its subject-matter was worth fuller and more detailed treatment than then given it. Herewith the result of that conviction. The thesis on its economic side is discussed in the terms of the gravest problem which now faces European statesmanship, but these terms are also the living symbols of a principle of universal application, as true with reference to American conditions as to European. If I have not "localized" the discussion by using illustrations drawn from purely American cases, it is because these problems have not at present in the United States reached the acute stage that they have in Europe, and illustrations drawn from the conditions of an actual and pressing problem give to any discussion a reality which to some extent it might lose if discussed on the basis of more suppositious cases. It so happens, however, that in the more abstract section of the discussion embraced in the second part, which I have termed the "Human Nature of the Case," I have gone mainly to American authors for the statement of cases based on those illusions with which the book deals. N.A. PARIS, August, 1910. SYNOPSIS What are the fundamental motives that explain the present rivalry of armaments in Europe, notably the Anglo-German? Each nation pleads the need for defence; but this implies that someone is likely to attack, and has therefore a presumed interest in so doing. What are the motives which each State thus fears its neighbors may obey? They are based on the universal assumption that a nation, in order to find outlets for expanding population and increasing industry, or simply to ensure the best conditions possible for its people, is necessarily pushed to territorial expansion and the exercise of political force against others (German naval competition is assumed to be the expression of the growing need of an expanding population for a larger place in the world, a need which will find a realization in the conquest of English Colonies or trade, unless these are defended); it is assumed, therefore, that a nation's relative prosperity is broadly determined by its political power; that nations being competing units, advantage, in the last resort, goes to the possessor of preponderant military force, the weaker going to the wall, as in the other forms of the struggle for life.