The Agadir crisis of the year before had left Europe with a bad state of nerves, and there was a general belief that only some agreement on shipbuilding could prevent a European war.

Lord Haldane and von Tirpitz spent many hours discussing the relative sizes of the two navies, but the discussions led to no definite understanding.

In March, 1913, Mr.Churchill, then First Lord of the Admiralty, took up the same subject in a different form.

In this speech he first used the words "naval holiday," and proposed that Germany and Great Britain should cease building first-class battleships for one year, thus giving the two nations a breathing space, during which time they might discuss their future plans in the hope of reaching a permanent agreement.

The matter lagged again until October 18, 1913, when, in a speech at Manchester, Mr.Churchill placed his proposal in this form: "Now, we say to our great neighbour, Germany, 'If you will put off beginning your two ships for twelve months from the ordinary date when you would have begun them, we will put off beginning our four ships, in absolute good faith, for exactly the same period.'" About the same time Premier Asquith made it clear that the Ministry was back of the suggested programme.