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in the previous session of the Diet, the land tax had come to be practically reduced, so that if the rate was. somewhat raised, it would not very greatly increase the burden of the land-owners. But, unfortunately, the Diet was dissolved before the Bill for the measure could be passed; and soon after, in January, 1898, I was relieved of my official charge.

My successor in office, Count Inouye, laboured hard to keep up the equilibrium of the economical body politic and the balance between the receipts and the expenditure in the State finances; and with this end in view he greatly reduced expenditure, by postponing the carrying into effect of certain predetermined measures concerning national enterprises. Yet, notwithstanding all this, there was still found in the Budget of 1898–99 a deficit of some 20,000,000 yen. More than that, there came to prevail a great stringency in the money market as a result of reaction from the recent sudden expansion of industry, and it was found impossible to issue, as was expected, a public loan in the home market; so that the deficit, temporarily made good from the Chinese indemnity, came to amount altogether to an immense sum of some 70,000,000 yen. For this reason the Government decided to resort to increased taxation, and presented, in May, 1898, to the twelfth session of the Diet, a Bill for increasing the rates of the land tax, the income tax, the saké tax, etc., which would raise the amount of revenue by some 35,000,000 yen, hoping in this way to keep up the balance between the receipts and the expenditures of State.

But, unfortunately, the Bill was rejected, and the Diet was subsequently dissolved. The Cabinet also resigned. In July of the same year Mr. Matsuda Masahisa became the Minister of Finance, but the new Cabinet lasted only a few months, resigning before the meeting of the thirteenth session of the Diet, which had been convened to meet a few days afterward.

Now, it is needless to repeat that all these financial difficulties were due to the great change wrought by the late war on the position of Japan, which necessitated the expansion of the State expenditures for various measures connected with the armament, diplomacy, education, communication, industry, etc. This expansion was so sudden and so great that immediately a large deficit was created in the revenue of the country; while at the same time great distress came to prevail among the industrial classes, owing to certain unavoidable causes. For these reasons the relief of the financial and economical distress of the country came now to assume the greatest importance.

In November of 1898 the economical distress of the country was at its last stage, the greatest uneasiness prevailing among all classes.