In the spring of 1909, the First Lord of the Admiralty, Mr. McKenna, suddenly demanded the construction of no less than six Dreadnought battleships. He based this claim on the rapid growth of the German Fleet and its expansion and acceleration under the new naval law of 1908, which was causing the Admiralty the greatest anxiety. I was still a sceptic about the danger of the European situation, and not convinced by the Admiralty case. In conjunction with the Chancellor of the Exchequer, I proceeded at once to canvas this scheme and to examine the reasons by which it was supported. The conclusions which we both reached were that a programme of four ships would sufficiently meet our needs. In this process I was led to analyse minutely the character and composition of the British and German Navies, actual and prospective. I could not agree with the Admiralty contention that a dangerous situation would be reached in the year 1912. I found the Admiralty figures on this subject were exaggerated. I did not believe that the Germans were building Dreadnoughts secretly in excess of their published Fleet Laws. I held that our margin in pre-Dreadnought ships would, added to a new programme of four Dreadnoughts, assure us an adequate superiority in 1912, “the danger year” as it was then called. In any case, as the Admiralty only claimed to lay down the fifth and sixth ships in the last month of the financial year, i. e., March, 1910, these could not affect the calculations. The Chancellor of the Exchequer and I therefore proposed that four ships should be sanctioned for 1909, and that the additional two should be considered in relation to the programme of 1910. Looking back on the voluminous papers of this controversy in the light of what actually happened, there can be no doubt whatever that, so far as facts and figures were concerned, we were strictly right. The gloomy Admiralty anticipations were in no respect fulfilled in the year 1912. The British margin was found to be ample in that year. There were no secret German Dreadnoughts, nor had Admiral von Tirpitz made any untrue statement in respect of major construction. The dispute in the Cabinet gave rise to a fierce agitation outside. The process of the controversy led to a sharp rise of temperature. The actual points in dispute never came to an issue. Genuine alarm was excited throughout the country by what was for the first time widely recognised as a German menace. In the end a curious and characteristic solution was reached. The Admiralty had demanded six ships: the economists offered four: and we finally compromised on eight. However, five out of the eight were not ready before “the danger year” of 1912 had passed peacefully away.