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 They are under no compelling sense of necessity. We of the Mother Country believe in the overwhelming advantage of naval centralization. The Colonies believe that even greater importance attaches to the principle of preferential commerce as a means of strengthening the financial basis of sea-power. If we cannot come to an understanding with them upon the economic question—which in its ultimate bearing upon Imperial finance is the problem underlying every other— they cannot come any nearer to us upon the naval question.

But if the imperfect Zollverein of a preferential system is once formed, it is certain that the defensive strength of the Empire will be augmented by an imperfect Kriegsverein. The enthusiasm of the Colonies may easily be aroused on behalf of Australian and Canadian navies. The principle is in theory vicious, and would be in practice wholly bad, were the question one of the faulty distribution of a given force. But if it means a positive and considerable increase of naval force beyond what the Empire as a whole would otherwise possess, the gain will be real, and ultimately very great, though still less, from an Imperial point of view, than if the Colonies were willing to put the funds required for the development of their navies at the disposal of the British Admiralty. With the new pride and interest which distinctively Canadian and Australian squadrons would awaken, the Dominion and the Commonwealth would pay more money and build more ships than under any other conditions. A small tax might be levied for purely naval purposes upon all imports throughout the Empire. Though the distribution of its forces would not be the best, the Empire would dispose of more ships, and of more money for ships, than under any other circumstances. The necessity for consultation between the Mother Country and her maritime Colonies upon questions of naval development and strategy would arise; foreign policy would have to be discussed in that connection; and an Imperial Council of Trade and Defence would inevitably emerge. But preferential commerce for the purpose of