and perhaps therefore, in the long run, in the military sense, is also threatened in the North by subsidies given by the Norwegians, in the Far East by those given by our ambitious and up-to-date' Japanese allies. In the West a formidable attack by the Government of the United States has long been pending. The total annual subsidy of $9,000,000 proposed by the latest Bill before the Senate leaves far behind the most ambitious efforts of other countries. This Bill contains elaborate provisions facilitating the transfer to the United States registry of foreign-built ships owned by corporations the majority of shares in which are held by American citizens. Interest in this Bill has been for a time eclipsed by the stronger interest taken in the victorious strategy of a great American capitalist combination, but it indicates an impending policy most dangerous to the British carrying trade both in the Atlantic and the Pacific.

The attention of a public then deeply absorbed in South African questions was not much aroused by the transfer of two or three minor British lines to German companies, but a transaction which had the appearance of the annexation of an appreciable proportion of the total British tonnage, including the two largest steamers then afloat and many other first-class vessels, by a Trust having its headquarters in the United States, caused real alarm. Apparently the directors and shareholders of the White Star and the other annexed companies were presented with the choice between prosperity and destruction: Either transfer your lines upon terms of great profit, or look to see a rival fleet started, supported by the most powerful financiers in America, by the group of great American railways which own most of the ports and can direct cargo as they please, and probably also backed by heavy subsidies out of the overflowing surpluses of the United States Treasury. Sell to us now on excellent terms, or wait a few years and then be driven off the sea and ruined. Human nature could not resist the argument, skilfully blended of prospects of gain and loss. Five British shipping companies have been brought beneath the summum imperium of an American syndicate; the great shipbuilding firm of Harland and Wolff has also been virtually annexed; and a pooling arrangement and division of spheres of operation has been effected by the Trust with the North German Lloyd and the HamburgAmerican line. The terms of this last-mentioned arrangement seem to be favourable to the Teutons, since their

companies have secured a guaranteed dividend of 6 per cent., a monopoly of their own ports, so far as relates to vessels of the Trust, and maintenance of their existing extensive connexions with British ports, such as Southampton. The directors of the Hamburg-American Line, in a circular to their shareholders, stated that, on the one hand, they could not ignore so powerful a combination, and that, on the other, it was out of the ' question that we should entertain proposals which were calculated to affect even indirectly in any form or shape the nationality and independence of our company.' The resultant of these conflicting reasons was that the company has entered into a combination intended to represent a 'defensive and offensive alliance (Schutz- und Trutzbündniss),' so that the syndicate and the two German companies ' accordingly undertake to support one another against the encroachments of outside competition.' This agreement is made for a period of twenty years. It is a most formidable alliance.

How was it that the British companies were absorbed by the Trust, while the German companies were able to conclude an alliance upon favourable terms? Why was it 'out of the question' for German, but not for British, lines to entertain proposals calculated to affect even indirectly in any form or shape the nationality and independence' of the companies. The answer is that, although these German lines to America receive no direct subsidy from the State except for postal services, yet the whole German system and the direct or indirect power of the Government control their action. The Times "observed with sarcastic truth:

'People say now that the whole thing might have been prevented had this country pursued a different policy. Perhaps it might, but what chance was there of a different policy? Suppose the White Star Line had gone to the Government and said, "Unless we are subsidised on the American scale we must be run off the ocean in a very few years," what would have been the answer? A string of beautiful cutand-dried free-trade maxims, with a few easy generalities about individual initiative and British enterprise thrown in as seasoning.'

The difference between Germany and Great Britain—one well understood by the able men who rule the Trust-was that in the one case they had to deal with a Government behind and in close touch with the companies, and ready to use the national force if necessary; in the other, they had to deal with companies not so supported.*

* The two preceding paragraphs were in print before Mr. Gerald

In these circumstances the inquiry of the Select Committee on Steamship Subsidies attracted more attention when it was resumed in 1902 than it did when it commenced its proceedings in 1901. It is startling to find a veteran Free-trader, Sir Robert Giffen, who appeared before it, advising not only the giving of subsidies upon conditions, after the German model, but a return, or threat of a return, to part of our old navigation laws, so as to reserve to British ships all trade between one part and another of the British Empire. This is the present law of France and the United States, and would, no doubt, if our Colonies assented to it, be a powerful diplomatic weapon to use, but the last, we should hope, to be used, against hostile barriers. Lord Brassey also declared himself in favour of subsidies judiciously employed. Sir Spencer Walpole, on the other hand, in the weighty evidence which he gave to the Committee, opposed subsidies on the ground that they had a generally enfeebling effect, so that any advantage might be dearly bought in the long run, and because they would lead to favouritism to certain lines. The Committee have also received protests from representatives of small lines against subsidies to special existing lines, or to lines to be called into existence. Indeed, the effect that Government patronage might have on British traders who are not patronised seems to have received as yet too little attention. We cannot subsidise everybody. It is maintained by many that the greatness of the postal subsidy enjoyed by the Peninsular and Oriental Company has been productive of some ordinary bad consequences of an artificially favoured position.

In this, as in other fields, we think that war, though always an evil in itself, may sometimes be necessary. It is, we think, obviously legitimate, if there is sufficient proof that existence of trade is at stake, that a nation should grant shipping subsidies in order to secure a position in a new market against a subsidising rival, or to defend against such a rival a position already established. We do not say that this state of things has as yet in our own case been reached. It is, of course, far better that no subsidies, except for postal

Balfour, in his speech at Sheffield on September 30, announced the agreement which the Government had come to with Mr. Morgan, the head of the Atlantic Shipping Combination. This agreement ensures the continuance of the British character of the ships, crews, and subordinate directorates. This does not affect the comparison between the previous action of the British and German companies.

services at the lowest obtainable rate, should be given by any nation. Subsidies given to defend British commerce should be regarded as a means of war used to compel others to lay down, together with ourselves, their arms. In this respect a modern American Trust must be regarded in the same light as a rival Power. If it be found that a capitalist combination of railway, manufacturing, and shipping interests is using its enormous strength to drive all competitors off the sea, and is establishing a monopoly which may eventually be used to tax the British consumer, it may become expedient that national strength should be brought into action to protect the citizen. If it were found that an important railway line, such as the Canadian Pacific, was passing, by the purchase of its shares, into the hands of a foreign capitalistic combination, with special interests to serve, it might become desirable that its control should be taken over by national authorities. It makes a vast difference by whom the shares in a company are held, but not much by whom Government stock, issued to replace shares, is held. A German railway can no more be annexed by the predatory capital of United States millionaires than a picture once lodged in the National Gallery can be carried off to America. These considerations are the more important inasmuch as we are only at the beginning of an era of colossal capitalistic combinations, aggregations of an imperial kind, communitates communitatum, in which companies, not individuals, will be the units. It were vain to found much hope upon the anti-Trust legislation occasionally threatening these institutions in America. As Mr. Dos Passos has shown in the lucidly written book referred to at the head of this article, history is strewn with the wrecks of statutes directed against commercial combinations and operations, from the earliest statutes against forestallers and regraters down to the latest against trade unions and trusts.

These trade questions are not those alone which have recently called the attention of the British public to the subject of State action in its connexion with the efficiency of the realm in the keen world competition. A German writer, Dr. Bonn, who has an intimate knowledge of our country, has recently pointed out in a Berlin review that the use, so frequent here of late, of the word 'Zollverein' is but one of many signs of the continentalising of England.' He adds that the more England is compelled to compete against other nations in spheres where she had formerly an

uncontested superiority, the more natural is it that her statesmen should study the methods of our rivals. The book by Veritas' to which we have referred is at once a proof of this desire and an assistance towards its satisfaction. Dr. Bonn adds:

"The purely empirical England, the England of traditional self-help, is measuring itself against rationally organised States with a technically educated officialdom. The State as power-holder (Machthaber), which England of the nineteenth century always regarded as only Oppressor, appears now at once as Educator and Promoter, and out of a thousand clumsy mediocrities drills on all sides useful work-tools, against which England can only put a limited number of individuals, certainly distinguished, but not to be increased at will.'

Men fall, a French writer has said, by the same qualities as those by which they rose, and so it may be with nations. In one era reliance upon individual energy may be justified, but in a world of organised, regimented, and drilled masses individual energy may fail in commerce as did the undisciplined valour of Gaul and German against the legions of Cæsar. Still, Englishmen are not yet convinced that an advance on the lines of German officialdom would in the long run promote the interests of British trade and commerce. Is it certain, however, that the energy is what it was a century ago, and that it has not been impaired by success and the rewards of success? It is true that the Englishman, like the Roman of old, possesses the gift of succeeding with less of that governmental superintendence and control without which in some countries it seems that enterprise cannot flourish. But one difference between the often compared Roman and British Empires is that the former did not, like the latter, have to meet the competition of other states or empires of a strong and highly organised character. they were to hold in the modern world the position held by Rome in the ancient, the English ought to have absorbed not only Ireland and Scotland, but France and Germany, and to have retained the whole of the North American population.

If

The danger to England lies in the incessant activity of the modern Continental State in connecting education with active life, and turning to good use the talents of each subject. We can war down subsidies by means of a larger purse, but much more than this is required if we are to hold our place in the world against the Germans. Here and there the Germans may oust a bit of English commerce by skilful application of their railway and shipping policy, but