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great cities of the Empire—Tokyo and Kyoto—by rail along the Nakasendo. It was found, however, that to complete this work would be very difficult, because of the configuration of the country, which is exceedingly rocky and mountainous, and so at last the Government decided in 1886 to give up the construction of the proposed railway along the Nakasendo, and to appropriate the funds for building a line along the Tokaido.

The funds realized by the above-mentioned loan being insufficient to cover the expenses required for the construction of branch lines from the Tokaido trunk line, the Supplementary Railway Bonds were issued in 1889.

The Government issued the Railway Public Loan in 1893, and constructed railways between various important places in the Empire. To construct railways in Hokkaido—northern territory of the empire—the Government issued another public loan, and this is called the Hokkaido Railway Loan. Neither of these loans has yet been completely issued.

3. Public loans issued for the purpose of military expansion. The rebellion in Kagoshima—south-western territory of the empire—in 1877, caused much military expense, which could not be supplied from the ordinary revenues. The Fifteenth National Bank, which had just been established, was willing to furnish some financial aid to the Government, so the Government borrowed the required money from the bank. In the years 1886–1889 the Government issued a Naval Loan to construct docks and forts, to manufacture arms and ammunition, and to build battleships and torpedoes. At the outbreak of war between Japan and China in 1894, military expenses were so great that the Government, with the agreement of Parliament, issued a loan of 250,000,000 yen for the contingent expenses. This is called the War Loan.

4. Public loans issued for the adjustment of the financial administration. Simultaneously with the reorganization of the political administration at the time of the Restoration, the Government was confronted by an urgent necessity of putting the financial system in order, and as the first step in this direction, it enacted a new regulation in 1873, by which the Government successfully undertook the withdrawal of the various forms of money that had been issued by the different feudal Princes. The bonds by which this was effected are called the ‘Kinsatu Exchange Bonds.’ Since then various measures of financial reform were carried out, and as the result of these measures, as well as of the natural economic development of the country, the financial world of Japan attained by about 1886 a stage of progress which afforded the Government a good opportunity for consolidating