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sition of new and the increase of old taxes on the one hand, certain taxes have been abolished on the other hand, with a view to simplifying the system of taxation.

Looking back over the development of our system of taxation, we may notice that the basis of national finances has widened proportionately to the growth of economic activities. It is a gratifying fact that, whereas the land tax was at first the only substantial source of revenue, other taxes, particularly indirect ones, have gradually gained in importance, so much so that one of them (tax on alcoholic drinks) has virtually gone ahead of the land tax.

During the first few years of the present era the fiscal administration was in a most imperfect condition, each department of the Government managing its fiscal affairs with a large degree of independence in absence of fixed rules. In 1872, the year following the political unification of the country by the establishment of the prefectural system, a first step was taken towards the management of fiscal affairs by the Minister of Finance, and in 1873 a ‘procedure of receiving and disbursing’ was determined which contained the germ of a budgetary system. The law of financial administration which was enacted in 1881 provided, among other things, for the formation of a Board of Audit directly responsible to the Emperor. By this time it was established in principle that the Government’s fiscal affairs should be managed by the Department of Finance subject to the examination of the Board of Audit. But the carrying out of the principle in practice was attended with great difficulties, owing to the practice of allowing the various departments to keep in their hands the respective funds appropriated to them—a practice which originated in the financial chaos after the Restoration, and which was for long a fruitful source of abuses. The year 1883 is memorable for the final abolition of this practice. The receiving, keeping, and disbursing of public money was entirely and effectively centralized in the Department of Finance in that year, and afterwards was entrusted to the newly established Bank of Japan. A fundamental reform of far-reaching consequences was thus accomplished in the system of financial administration. Another important advance was made in 1886, whence dates the practice of publishing the annual budgets and settled accounts in Imperial ordinances. With the promulgation of the Constitution in 1889 the law of financial administration was revised, and the system of financial administration was given the present shape. The Budget is now prepared by the Minister of Finance, and has to be voted annually by the Diet, to which the settled accounts, as attested by the Board of Audit, are also presented. Before the establishment of the Diet, all reforms in the system