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sion in currency circulation, the abnormal fixing of capitals, and, worst of all, the failure of these petty banks, which brought about frequent disturbances in the money market. In the belief that, while discouraging the fresh establishment of these banks, if an effort was taken towards rearranging the business of the banks already existing, there would be ample room for improving the economic conditions of the country, the Government considered measures should be taken in regard to this matter. As, however, it was not desirable, from the legal point of view, to entirely suppress the creation of banks, it was proposed to impose on them a restriction by fixing a minimum amount of their capital, and the establishment of banks whose capital was under 500,000 yen was forbidden. This measure was so successful that, while petty banks of suspicious character immediately disappeared, the reorganization of those whose business had been in disorder was effected, and the floating of local loans was stopped by degrees. These regulations relating to the banks, combined with the postponement of public loans, began to tell favourably on our money market. The principal feature of the Budget for the year 1902–1903 was strict economy, which was manifested in the curtailment of any expenditure which was not absolutely necessary. All the funds available were employed for the purpose of redeeming the public debt. Some efforts have also been made for the encouragement of thrift among the people. In connection with the matter the Prefectural Governors were instructed to use every possible means within their powers for carrying into effect this idea. The result obtained so far seems very promising, as may be seen from the steady increase in the public deposits of the post-office savings-banks. The results of the measures thus taken by the Government for the furtherance of the economic prosperity soon began to manifest themselves. For since then prices and wages have been declining. The adverse condition of our foreign trade has been remedied. The rate of the Bank of Japan has come down, and, excepting a trifling amount issued towards the end of last year, we have not seen any important over-issue of notes, which had hitherto been rather an ordinary feature. As to the condition of the money market, it may be mentioned that the money deposited without interest at the Bank of Japan by other banks reached the considerable sum of 20,000,000 yen. This is an unusual state of things never seen before in the history of the Bank, which, on the contrary, used to lend to these banks. Again, the trade returns for 1902 show at a glance an excess of the imports over the exports amounting to 13,000,000 yen. But it has been ascertained that, if the method of calculation with regard to imports is applied to the case of exports, and if