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various expenses are included in the values of exports, this adverse condition would be totally reversed. In 1902 it was found that the value of the exports was really in excess of the imports to the extent of about 15,000,000 to 16,000,000 yen. While these symptoms of economic prosperity might, indeed, be a matter of congratulation for our financiers, it is very wonderful to see how rapidly the economic conditions of the country have been developed.

Now let us proceed to the discussion of the question of financial and administrative reorganization which largely bulked in the session of Parliament in 1902–1903. To deal with this most complicated problem the Government ordered, in 1902, a Special Commission, of which I am a member, and to which allusion has already been made. The Commission was subdivided into three different sections, namely, finance, administrative, and official organization, and I have been entrusted with the control of the financial section. As I have been, therefore, personally concerned in this matter, I may say that I can dwell in full detail on the result of the inquiries which have been undertaken since then in relation to the subject of financial reform. Seeing that so far our financial system had been partially reorganized and placed in somewhat safer conditions than formerly, our thoughts naturally turned to the question of what measures should be taken in the future. We felt the necessity of enlarging the scope of our inquiries, so that we might gain an insight into everything happening in foreign countries as well as at home which may be utilized for our own purposes. The first and most important matter which engaged our attention was the growth of our relations with the Asiatic continent, which was taken into full consideration when the post-bellum financial scheme was first drawn up. With the steady development of the national strength our operations, political and commercial, much increased in activity in these countries. Under the circumstances that the future augmentation of national expenditure was unavoidable in view of our ever-increasing influence in that continent, inquiries were made to ascertain what sources of revenue were available to meet future requirements of expenditure. It was found that the land tax was not a very promising source of revenue, as it was not practicable to increase it beyond a certain point, and, besides, any attempt to increase it has always been the cause of political disturbances. We found, however, that the best sources of revenue were liquor (saké) and tobacco, which, if properly managed, would make a considerable addition to our revenue. Customs duties may be thought by some to be an equally promising source of filling the public coffers. But we must be careful not to conclude that after the lapse of twelve