inconsistent with the line he had pursued with me, and it became evident
that the German Government was likely to insist on proceeding with the
new Fleet Law. When we looked closely into the copy of the draft which
the Emperor had given to me, we found very large increases
contemplated, of which we had no notion earlier, not only in the
battleships, about which we did know before, but in small craft and
submarines and personnel. As these increases were to proceed further,
discussion about the terms of a formula became rather futile, and we had
only one course left open to us--to respond by quietly increasing our
navy and concentrating its strength in northern seas. This was done with
great energy by Mr. Churchill, the result being that, as the outcome of
the successive administrations of the fleet by Mr. McKenna and himself,
the estimates were raised by over twenty millions sterling to fifty-one
millions.

[Illustration: _International_

VISCOUNT GREY OF FALLODON

SECRETARY OF STATE FOR FOREIGN AFFAIRS FROM 1905 TO 1916.]

In the summer of 1912 I became Lord Chancellor, and the engrossing
duties, judicial as well as administrative, of that office cut me off
from any direct participation in the carrying on of our efforts for
better relations with Germany. But these relations continued to be
extended in the various ways practicable and left open to Sir Edward
Grey and the German Chancellor. The discussions which had been begun
when I was in Berlin, about Africa and the Bagdad Railway, were
continued between them through the Ambassadors; and just before the war
the draft of an extensive treaty had been agreed on.