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tax on the industry. As to the tobacco tax, the matter still remains a question to be solved in several countries. In Europe the tobacco industry is mostly monopolized by the Governments. In England and America it is a private enterprise. But if the industry entirely falls into the powerful hands of a company or of a trust, it will, in fact, become a monopoly. The time will soon come to decide the question whether the industry should be made a Government monopoly or should be managed by a trust. There will be, however, only two courses open for adoption—namely, either that the whole industry should become a Government monopoly, as it is in France, Austro-Hungary, and Italy, or that it should be controlled by means of a heavy tariff, as practised in England. At any rate, as tobacco is an article of great home consumption, and, besides, as the industry can be very easily controlled in Japan, it will doubtless become a highly promising source of revenue in the future, although there will arise various complicated problems to be dealt with in connection with the operation of monopoly systems, in case the entire industry should be made a Government enterprise. After all, it is clear that it will be impossible to find better sources of revenue which admit of further development than the aforesaid taxes on saké, tobacco, and sugar, and the Customs duties, of which the first two are the most promising.

When we next turn to the item of expenditure, it should be taken into consideration that there are a great many undertakings to be accomplished in the future in connection with the development of the national interests and with the progress of civilization. These are, amongst others, the improvement of railways, roads, and harbours; undertakings in China and Corea; the establishment of educational institutions; and the construction of lighthouses, waterworks, drainage works, etc. But by far the greatest and most important question to be dealt with is that of naval expansion—namely, the ‘Third Naval Expansion Scheme.’ That the necessity of increasing our navy would arise must have been no doubt foreseen by some people. We who were associated with the management of the finances, however, did not expect such a necessity would arise at such a juncture, yet it has come, and at the same time has come the difficulty of providing funds for this expansion scheme. Of the various undertakings planned in the post-bellum administration scheme which was formed directly after the war with China, the most important was the naval and army expansion, which we have treated since then as the vital question of our national welfare and development. This scheme of military expansion was so arranged as to be finally completed at the end of ten years—that is, between 1903 and 1904.