The elements of the policy so deduced and proposed for consideration may be summarized in brief as follows:

(1) A Navy Department organized for war.

(2) The continued support and development of the existing schools for naval education and training, and the existing special stations for technical work and training. To these add a special school with efficient plant for air training on each coast. (3) The gradual development to completion of four great naval home bases, at New York, the Chesapeake, Puget Sound and San Francisco Bay.

(4) The continued development of the Philadelphia navy yard as a subsidiary base for building and manufacturing purposes and as a home for the reserve fleet, auxiliaries and advanced base outfit and personnel; and of Key West as a subsidiary base ior torpedo vessels.

(5) Continue the use of the existing navy yards at Portsmouth, S. H., Boston, Mass. and Charleston, S. C., now in operation, for as long as their use may be necessary for the upkeep of the feet, pending sufficient development of the home bases to fully accomplish this upkeep; but expend no money on any of them beyond that necessary to keep their existing plants-without extension or development-in efficient condition for performing their present work; and conduct business in all of them with a Few to their being eventually closed as navy yards, when the elopment of the bases has sufficiently progressed to permit of the disuse of their facilities.

6) Continue the closure of the navy yards at Pensacola, Fla., and New Orleans, La.

(7) Continue and push to completion the outlying bases at Guantanamo and Pearl Harbor, and begin the work of founding a complete outlying base at Guam. The needed outlying base at Panama has been already provided for under Canal appropria

tions.

(8) Select a site in the Philippines for possible future development as a subsidiary base; and continue to use such facilities as we now have at Olongapo; but expend no money for naval purI poses anywhere in the islands at this time, beyond what is absolutely necessary to keep the Olongapo plant in condition to do its

peace work.

To carry out the proposed policy and adopt the reforms sug

gested requires the placing of the national interests before all others; and will further require the full and patriotic cooperation of Congress, and a revised method of making naval appropriations. Let us hope that this will come in due time, now that indications point to consideration being given to the adoption of the budget system; and that there will follow a more comprehensive and less detailed method of drawing appropriation bills, under fewer and more general headings, accompanied by a strict accountability of the administrative and disbursing officers of the government, which will permit of the total amount of the money of the people appropriated for naval use being used to the best advantage of the nation.

[COPYRIGHTED]

U. S. NAVAL INSTITUTE, ANNAPOLIS, MD.

EARLY SIGNS OF INTENDED INVASION

E FIRST LIEUTENANT RENATO TITTONI, U. S. Marine Corps

Rumors of intended invasion are likely to cause alarm to such an extent in this country that it would be the topic of conversation practically every American home, therefore it would appear disable to consider what may be the earliest "unmistakable ms" of such an undertaking.

The first point to be considered would be what could be learned hrough the business world if an invasion were to be secretly attempted.

Taking the world of finance, if any warlike designs were in Contemplation, the gold would have to be so greatly hoarded up that the movement would be felt on the Bourses and suspicion aroused, provided that it took place at any other time than the ual draining. The European powers, however, have already made provisions to accumulate a war fund, as is shown below:

London being the center of money markets of the world the financial crisis is first felt there, but it is pointed out that the autumnal drain (when most settlements are made of the trade balances) of gold nearly always necessitates the raising of the tank rate. For instance in August, 1907, the bank rate in London was raised from 4% to 42% and in the early part of November, 1907, it had reached 7%. Now at the outbreak of the Franco-PrusStan War the bank rate was 3% but the highest rate reached that Jear was 64; therefore it will be seen that the financial crisis of

Germany also has a war chest amounting to millions of dollars, the oney for which was provided out of the indemnity received from France in 1871-2

1907 had practically the same effect in the market as the outbreak of the war.

The great European banks keep large credits in London which are used in the short loan market but it does not seem probable that a hostile power, when she already has a war chest, would risk the success of sudden invasion by attempting to withdraw he London credit.

Colonel Concannon, an eminent English authority and busines man, states the following:

If it were worth the while of such a hostile power to run the risk c revealing its intentions, the process by means of which the withdrawal c gold would be accomplished would be the raising of the bank rate in suc country which would cause exchange on that country to fall to such level that shipments of gold on a large scale would take place. Of cours if we say the German bank rate were to be raised to an unduly high lev it might arouse suspicion that something abnormal was wrong, partic larly if it occurred at a period of monetary ease; but if it took place at period of active trade, when money was universally dear, it would attra little attention, and might be put down to an acute internal monetary crisi

The movements of prices of international stocks might possib give a little more indication of a hostile intention. The soura of information accessible to great bankers are almost illimitabl and, however the secret might be kept, it would be almost impo sible to keep the matter from the knowledge of the great inte national banking houses. This, of course, would lead to a myste ious volume of selling, but such selling need not be held to inc cate a pending hostile act.

It would create an uneasy feeling, but the people in possessio of the information would not naturally give away their excee ingly valuable knowledge of the situation until the last momer

The stock exchange and the money market gave no prelimina warning of the outbreak of the Franco-Prussian War. C Friday, July 15, war was declared, and on the preceding d Consols were quoted at 92, while the bank rate was 3%. C Monday, July 18, Consols were quoted at 8934 and on July 2 the bank rate was raised to 32%, on July 23, to 4%, on July 2 to 5%, and on August 4, to 6%. Of course the war occurred at period of monetary ease; had it taken place during the usual peri of the autumnal drain for gold it might have had to have be raised to a very much higher figure; but the point is that t money market did not take alarm until about a week after w had been declared.

In the case of the Russo-Japanese War, the market had, of course, been prepared for a long time for an unfavorable development of the dispute, but it was not until two days after the rupture of diplomatic relations that Consols had an appreciable fall, and Japan 4%, sterling loan, which was quoted at 74 on January 2, was quoted at 741⁄2 on February 5, and did not move February 8, when it dropped to 671⁄2.

For these reasons therefore, it would not be wise to look to the money market or to the stock exchange to give definite warning if any intended raid.

The coal market is so closely watched, each company having a fairly regular clientele, that suspicions would be aroused if a ger quantity of their coal was taken at any time in any one traction.

The official coal output in 1911-12 for the countries mentioned

Dring the fiscal year 1913, there were consumed by the fleet tons domestic coal purchased, 900,092 plus tons; 45,748 tons foreign coal purchased.*

The wheat crop is the main staple in the foodstuffs, which are as A matter of course very essential factors in case of war. We are decided advantage in this supply.

In 1909 we produced about 750 millions of bushels with * population of 88 millions and exported several millions of bushels to foreign countries. We could draw enormous supplies by internal communication which a hostile navy could not touch. The matter of water transportation for troops is one in which we are at a decided disadvantage; the matter has been, however, socften talked about and so luridly depicted that it is not necessary to draw upon it.

Extract from annual report of the Paymaster General, United States