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beneficial public works. Lines of railway had to be constructed, suitable buildings erected for the housing of officials and the transaction of public business, harbours had to be dredged and improved in the interests of the foreign and domestic trade, and a cadastre for the entire group of islands became absolutely necessary as a basis for the nationalization of the land and the assessment of the most important tax. Banking and monetary systems had likewise to be provided for the new colony. That such an extensive programme could be carried out in its entirety within a decade or two is not, of course, to be expected; but much has already been done, and provision has been made for the execution of such items as remain unfulfilled.

The Formosan Government, in fact, has laid out, since the islands came under the sovereignty of Japan, no less a sum than £3,072,000 on railways, telegraphs, harbour improvements, and other undertakings of a character directly beneficial to the public. Leaving out the calculation of the military outlay, which has now been curtailed to very modest dimensions, thanks to the pacific condition of the islands, which may be accepted as the direct outcome of a salutary civil administration, we have a total expenditure upon Formosa by the Imperial Government of £9,786,000.

The revenues of the islands, on the other hand, have in the same period of time amounted to £5,930,000. This sum, plus a subsidy aggregating £2,500,000 sterling, and a loan of £1,300,000, sufficed to balance accounts.

It should be noted, however, that both the subsidy and the loan were almost exclusively applied to the prosecution of public works, as hereafter specified, and the money, instead of being regarded as expenditure incurred without prospect of adequate return, ought properly to be considered as capital well and profitably invested for the benefit of the inhabitants.

Baron Kodama, the Governor-General of Formosa, introduced in the Diet at Tokyo in 1898 a programme for the execution of public undertakings to extend over a period of twenty years, together with a project for establishing Government monopolies in the three principal industries of Formosa.

After considerable discussion, the proposals passed into law, and embodied the provision of a trunk line of railway extending from the north to the south of Formosa, the cadastration of the lands, the construction of harbours, particularly at Kelung, and the building of suitable Government offices and official residences.

To meet the cost of these undertakings, the Diet authorized the Colonial Government of Formosa to raise loans to the amount of £3,500,000 sterling, the principal and interest to be