‘Your letter is very kind, and I appreciate _fully_ all the difficulties of the situation. But there is no chance whatever of my being able to go on, if the quota of capital ships for 1914–15 is reduced below four. Even the _Daily News_ does not expect that. I base myself on (1) my public declarations in Parliament; (2) the 60 per cent. standard (see Minute of the Sea Lords); (3) the Cabinet decision on the Mediterranean; and (4) my obligations towards Mr. Borden. You must in this last aspect consider broad effects. ‘If on a general _révirement_ of Naval Policy the Cabinet decide to reduce the quota, it would be indispensable that a new exponent should be chosen. I have no doubts at all about my duty. ‘My loyalty to you, my conviction of your superior judgment and superior record on naval matters, prompt me to go all possible lengths to prevent disagreement in the Cabinet. But no reduction or postponement beyond the year of the four ships is possible to me. ‘I gathered that the final decision was to stand over till we reassemble in January. But there is no hope of any alteration in my view on this cardinal point, or of the view of my naval advisers.’ To the First Sea Lord I wrote on December 26:— ‘I could not in any circumstances remain responsible if the declared programme of four ships were cut down. But my responsibility is greater than anyone else’s, and I hold my naval colleagues perfectly free to review the situation without regard to the action which I should take in the circumstances which may now be apprehended.’ Prince Louis, however, assured me that he and the other Sea Lords would not remain in their appointments in the situation described. My two political colleagues, Dr. Macnamara and Mr. Lambert, the Civil Lord, were both stalwart Radicals, but there was no doubt that they also would have declined responsibility. They had both been at the Admiralty for six or seven years, and their devotion to the interests of the Navy and of the National Defence was unquestionable. We thus all stood together. During the interval of the Christmas holidays, which I spent in the south of France, I restated the Admiralty case in the light of all the discussions which had taken place. The closing passages of this Document may be reproduced. THE GENERAL SITUATION