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encouraging its inflow. The result was fairly reassuring, for in 1883 the volume of specie in the country increased to 19,000,000, till at last, coming to 1887, paper money could be restored to par.

About the time of the advent of the constitutional régime, in 1890, both the financial programme of the Government and the economic enterprises began to show an expansion somewhat out of due bounds, and this undue expansion was in danger of engendering a panic. The crisis was, however, tided over, and with the retrenchment programme subsequently adopted, in compliance with the demands of the Diet, the Treasury had at its disposal the sum of about 36,000,000 yen, when the Chino-Japanese War broke out. At the same time the Bank of Japan possessed over 90,000,000 yen as reserves against paper money, for the convertible system had been inaugurated in the meantime.

If I may compare the state of finances subsequent to the civil war of Satsuma to the state of things in a house where there is mourning and weakness, I think I may compare the post-bellum affairs of ten years ago to a fête in the same house after a period of mourning is over. The nation throughout made up its mind to practise the utmost economy in the one case, while on the other occasion the nation gave itself up to be lavish in all its doings—and with what result? Not only has the 300,000,000 yen indemnity exacted from China left the country, but the evil consequences which the thoughtless acts of the nation entailed so far upset the balance of trade in favour of imports that the money which has flowed out of the country during the last seven years aggregated as much as 700,000,000 yen. This is the point which has been causing me the greatest anxiety, and it is in view of that consideration that I have to urge upon you the necessity of arranging the State and private enterprises on a sound economic basis, and that I have to ask the question why Japan, in getting the supply of materials for her manifold works, should not reduce the supply she gets from abroad, and should not take steps to utilize home products? It must be admitted that Japan is placed in an exceedingly disadvantageous situation in all the important works she has had to undertake. Look, for instance, how the Powers are managing their own armament business. England, France, Germany, and others, are all providing their own armaments without depending upon others for help. In Japan, however, this is far from being the case, and the more works the Government undertakes the more will money leave the country. I admit that there are many measures that demand speedy attention from the Government, but I must declare at the same time that the relative degree of importance and the relative degree