And so it turned out. Just before the outbreak of the war, the Sun Banner was hoisted quietly on the two battleships and they were given the names of _Nippon_ and _Hokkaido_, respectively; but they were omitted from the official Japanese Navy List and left out of our calculations. How Pekin and Tokio came to terms with regard to these two ships remains one of the many secrets of east Asiatic politics. The generally accepted political belief that China was not financially strong enough to build a new fleet and that Japan, supposedly on the very verge of bankruptcy, could not possibly carry out her _postbellum_ programme, was found to have rested on empty phrases employed by the press on both sides of the ocean merely for the sake of running a story. There has never yet been a time in the history of the world when war was prevented by a lack of funds. How could Prussia, absolutely devoid of resources, have carried on the war it did against Napoleon a hundred years ago, unless this were so? In the redistribution of our war vessels in the Atlantic and the Pacific after the return of the fleet from its journey round the world, the Navy Department had calculated as follows: Japan had fifteen battleships, six large new ones and nine older ones; in addition she had six large new and eight older armored cruisers. We have one armored cruiser and three cruisers in Manila, and these can take care of at least five Japanese armored cruisers. Japan therefore has fifteen battleships and nine armored cruisers left for making an attack. Now if we keep two squadrons, each consisting of six battleships--the _Texas_ among them--off the Pacific coast and add to these the coast-batteries, the mines and the submarines, we shall possess a naval force which the enemy will never dare attack. Japan, on the other hand, figured as follows: We have two squadrons, each consisting of six battleships, among which there are six that are superior to any American fighting ship; these with the nine armored cruisers and the advantage of a complete surprise, give us such a handicap that we have nothing to fear. As a reserve, lying off San Francisco, are the ironclads _Hizen_ (ex _Retvisan_), _Tango_ (ex _Poltawa_), _Iki_ (ex _Nicolai_), and the armored cruisers _Azuma_, _Idzumo_, _Asama_, _Tokiwa_, and _Yakumo_. Besides these there are the two mortar-boat divisions and the cruisers sent to Seattle, while the armored cruiser _Iwate_ and two destroyers were sent to Magdalen Bay. All that remained in home waters were the fourth squadron, consisting of former Russian ships, and the cruisers which would soon be relieved at the Philippines.