All our financial commitments, fomented by rising prices and the ever-increasing complexity and refinement of naval appliances, came remorselessly to a head at the end of 1913 when the Estimates for the new year had to be presented first to the Treasury and then to the Cabinet. Knowing that the conflict would be most severe, I warned all Admiralty departments to be well ahead with their financial work and to prepare justification for the unprecedented demands we were obliged to make. We set forth our case in a volume of some eighty pages in which we analysed minutely each vote and marshalled our reasons. The main burden of this task fell upon the Financial Secretary, Dr. Macnamara, whose long experience of Admiralty business was invaluable. We failed to reach any agreement with the Treasury in the preliminary discussions, and the whole issue was remitted to the Cabinet at the end of November. There followed nearly five months of extreme dispute and tension, during which Naval Estimates formed the main and often the sole topic of conversation at no less than fourteen full and prolonged meetings of the Cabinet. At the outset I found myself almost in a minority of one. I was not in a position to give way on any of the essentials, especially in regard to the Battleship programme, without departing from the calculated and declared standards of strength on which the whole of our policy towards Germany depended. The Cabinet had decided in 1912 to maintain equality in the Mediterranean with the Austrian Fleet, four Dreadnoughts of which were steadily building. Moreover, the issue was complicated by the promised three Canadian Dreadnoughts. The Canadian Government had stipulated that these should be additional to the 60 per cent. standard. We had formally declared that they were indispensable, and on this assurance Sir Robert Borden was committed to a fierce party fight in Canada. As it was now clear, owing to the action of the Canadian Senate, that these ‘additional’ ‘indispensable’ ships would not be laid down in the ensuing year, I was forced to demand the earlier laying down of three at least of the battleships of the 1914–15 programme. This was a very hard matter for the Cabinet to sanction. By the middle of December it seemed to me certain that I should have to resign. The very foundations of naval policy were challenged, and the controversy was maintained by Ministerial critics specially acquainted with Admiralty business, versed in every detail of the problem and entitled to be exactly informed on every point. The Prime Minister, however, while appearing to remain impartial, so handled matters that no actual breach occurred. On several occasions when it seemed that disagreement was total and final, he prevented a decision adverse to the Admiralty by terminating the discussion; and in the middle of December, when this process could go on no longer, he adjourned the whole matter till the middle of January. I wrote to him on December 18:—