I think you’re talking about the Naval Defence Act 1889, which stipulates the Royal Navy to maintain the number of battleships to be at least equal to the sum o

I think you’re talking about the Naval Defence Act 1889, which stipulates the Royal Navy to maintain the number of battleships to be at least equal to the sum of next largest TWO navies.[0] Anyway, back to the point of spending just less than what your (main?) opponent do. Another big problem is that back in Cold War days, it is rather hard to work out your opponent’s exact military capability. US use this to their advantage by starting up Strategic Defence Initiative (aka Star Wars Programme) to bluff the Soviets to spend more of their crippling economic capability to their military, ultimately accelerated their collapse. [0] https://en.m.wikipedia.org/wiki/Naval_Defence_Act_1889 https://en.m.wikipedia.org/wiki/Naval_Defence_Act_1889