so much so that the hope of defeating Germany by superior stores of munitions and a greater number of guns has had to be given up.  The lack of transport facilities will also prevent the larger output of war industries in America making up for the lesser output in England.  The speed with which the U-boat warfare has destroyed vessels excludes the possibility of building new vessels to furnish adequate cargo space.  More vessels have been destroyed in a month of U-boat warfare than the English dockyards have turned out in the last year.  Even the thousand much-talked-of American wooden vessels, if they were there, would only cover the losses of four months.  But they will not come before it is too late.  English experts on the subject have already said quite openly that there are only two ways of counteracting the effect of the U-boats:  either to build vessels quicker than the Germans destroy them, or else to destroy the U-boats quicker than the Germans can build them.  The first has proved to be impossible, and the U-boat losses are far less than the new vessels building.

  England will also have to reckon on a progressive rise in the loss
  of tonnage.

  The effects of the U-boat warfare on the people’s provisions and
  on all private and Government activities will be felt more and
  more.

  I anticipate, therefore, the final results of the U-boat warfare
  with the greatest confidence.

According to secret but reliable information, the Prime Minister Ribot recently stated to the Italian Ambassador in Paris that France was faced with exhaustion.  This opinion was expressed before the beginning of the last Franco-English offensive.  Since then, France has sacrificed life to a terrible extent by keeping up the intensity of the fighting until the offensive ceased.

The French nation is certainly doing marvellous things in this war, but the Government cannot sustain the enormous burden after it reaches a certain limit.  A reaction in the temper of France, which is kept up by artificial means, is inevitable.

As regards our own internal situation, I do not under-estimate the difficulties presented by the inevitable results of the severe fighting and the exclusion from the seas.  But I firmly believe that we shall succeed in overcoming these difficulties without permanently endangering the nation’s strength and general welfare, without any further crises and without menace to Government organisation.

Although we are justified in viewing the total situation in a favourable light, I am nevertheless in complete agreement with Count Czernin in pursuing the aim of bringing about as speedily as possible an honourable and, in the interests of the Empire and of our Allies, just peace.  I also share his opinion that the important factor of the weakening of Russia must be exploited, and that a fresh tentative