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vessels by the southern chiefs was but an outward sign of the feeling of the people as a whole. After the Restoration, however, it was realized that it would only be possible to successfully contend with the foreigners by adopting their own methods. The former anti-foreign feeling was principally due to the teaching of the Chinese philosophers. The revulsion of feeling was very great, and the Europeanizing of everything took place with a rush. Formerly, under the Tokugawa Government, it was even forbidden to any Japanese subject to leave the country. In company with the present Marquis Ito and three other young men, however, I managed to reach London some forty years ago, four years before the Restoration. When we returned we spoke strongly in favour of the introduction of foreign methods. Little by little, as time passed on, the reaction set in, and everything was modelled upon the European plan—education, courts of justice, the army and the navy, etc. The peculiar situation then arose that the upper classes of public life moved much more rapidly along the path of progress than did the lower, and that the outward skeleton and framework of a modern civilized and complicated State system was adopted before the muscles and sinews had time to develop themselves correspondingly. Thus, courts of justice were established while yet the Civil Code and the penal laws were unrevised. Such was the peculiar condition of the country at the beginning of the new era.

If we return to the financial side of the situation, we note at first how very unsatisfactory was the method of the collection of the revenue. Each feudal lord had his own methods and his own taxes. Besides this, as has been said before, the taxes were paid in rice. It was quite natural that under such circumstances much expense was incurred on the one hand, necessitated by sudden and wholesale reforms, and the revenue was so uncertain, on the other, that the finances were in a most unenviable state. The various paper-moneys in circulation also added to the difficulties of finance. Now, various departments having been modelled upon European lines, the expenditure became a fixed and tangible amount. And this had to be met by an ever-varying and uncertain revenue. This was a state of things that could not last long, and in the third year of Meiji (1870) the feudal system was abolished, and the lands of the feudal lords placed under the immediate control of the Government. The various paper-moneys were also all gathered in and centralized under the Imperial Government.

The Financial Department at that time was under the direction of the late Marquis Okubo, while I and Baron Shibusawa were Vice-Ministers. The expenditure continued to grow