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economy. Having regard to the present state of politics, naval expansion must be considered as a matter of the utmost urgency; but, from the financial point of view, any scheme tending to increase our burdens should not be encouraged. If, however, it has once been settled that certain expenditure is necessary, we must be prepared to meet the outlay in such a way as to involve the least possible trouble. In the year 1896, when we drew up the present financial programme, in accordance with an entirely different condition of things resulting from the war with China, it was generally acknowledged that the strain on our resources would be an extremely severe one. For, according to the plan then adopted, the annual expenditure, which had been only 80,000,000 yen in the previous year, was to be more than doubled, and in course of time to be increased to the enormous amount of 300,000,000 yen. With a view to giving freer scope and greater activity to our future financial operations, which were to be undertaken under entirely new conditions, we introduced the gold standard, and also adopted the system of a Government tobacco monopoly. Whilst the new programme was in progress under efficient management, the money market unfortunately began to present very depressed conditions, as the result of which many complaints were heard amongst the general public. Consequently, when Marquis Ito formed his Cabinet, with Count Inouye as Minister of Finance, it was decided, in view of this depression of the money market, to modify the financial programme. In order to relieve the money market, Count Inouye purchased Imperial bonds to the amount of 30,000,000 yen, with the money held by the Imperial Treasury as a reserve; and also lent to the Industrial Bank an amount exceeding 3,000,000 yen, from which fund the Bank gave financial assistance to those industrial companies at Osaka and other towns which were in difficulties. Finally, various undertakings started after the war were postponed. The policy of the Financial Minister was at the time criticised as being unprogressive. But as his policy was no more than a slight modification of the original plan, necessitated by the bad economic condition of the country, it could hardly be possible to justify the criticism. The Bill for increasing the land tax—proposed by the same Minister in 1888 as a part of his scheme—was not approved by the Houses, and Parliament was dissolved, followed by the resignation of the Ito Cabinet.

Then Count Okuma’s Ministry came in. The policy of the new Cabinet, which further increased military expenditure, caused severe criticism, principally on account of its inconsistency, the Ministry having previously opposed the very scheme of military expansion. But this could easily be explained by the Government. Count Okuma practically made no