Heligoland, a free gift from us, was the first asset, a most valuable asset, which Germany was able to place to the credit side of her naval balance sheet. Other assets were rapidly acquired. In 1898 the building of the new navy seriously began, in 1900 was passed the famous German Navy Law setting forth a continuous programme of expansion, the back alley between the North Sea and the Baltic was cut through the isthmus of Schleswig-Holstein, and Germany as a Sea Power rose into being. The British people, at first amused and slightly contemptuous, became alarmed, and the Royal Navy, always watchful, never boastful, never undervaluing any possible opponent, settled down to deal in its own supremely efficient fashion with the German Menace. Neither the British people nor the Royal Navy were lacking in confidence in themselves, but neither the people nor the Navy—we are, perhaps, the least analytical race on earth—realised the immovable foundation upon which their confidence was based. The people were wise; they simply trusted to the Navy and gave to it whatever it asked. But the Navy, though fully alive to the value of its own traditions, training, and centuries-old skill, did not fully understand that the source of its own immense striking force was moral rather than material. Like its critics it thought over much in machines, and when it saw across the North Sea the outpouring of ships and guns and men which Germany called her Navy, it became not a little anxious about the result of a sudden unforeseen collision. It was, if anything, over anxious.