Although the organization of the local government had been placed on a fairly complete footing and uniformity of method had begun to be discernible, both the military classes and the commoners in the various fiefs were still disposed to pay more respect to their former lords than to the new officials appointed by the central authorities. Under these circumstances it was suggested by a governor, who had himself been a great feudal baron, that the military monopoly of the _samurai_ should be abolished and their pensions commuted, and that the army should be recruited alike from the _shizoku_ and commoners. The versatile Kido again recommended that the _han_ (fiefs) should be replaced by _ken_ (prefectures), so as to thoroughly centralize the administrative power. It is remarkable that the view was at once seconded by many barons, who memorialized the throne begging the latter to reorganize all their fiefs into prefectures. The policy was finally adopted in 1871, when the 263 _han_ were completely abolished and replaced by 372 new _ken_, and ample rewards at the same time given to the few baron-governors who had taken the lead in urging this change. Thus the central government came into full control of the lands and people that had been under the sway of feudal chiefs ever since the Kamakura epoch. Subsequently, various changes of boundaries were made, until in 1890 there were 43 prefectures (_ken_) and 3 cities (_fu_), besides one board of administration (_cho_) of Hokkaidō. The abolition of the _han_ had its grave financial problem, for it now became necessary for the central government to assume the responsibility of the fiduciary notes previously issued by the various feudal lords. To meet this liability the government issued, in lieu of the fiduciary notes, bonds redeemable within fifty years, and for the purpose of satisfying the claims of the _shizoku_ an envoy was sent to England to raise a sum of ten million _yen_. This, Japan's first foreign debt, was contracted in 1872. In the following year the system of commuting annuities was fixed, those whose incomes ranged from 100 _koku_ downward being allowed, on application, to commute at six years' purchase, half of the commutation money being paid in cash and the remainder in public bonds. The system was subsequently extended to larger incomes, and in August, 1876, the method of commutation was made compulsory, applicable to the income of all the _shizoku_, bonds being handed to them in the following year. These bonds, carrying interest at different rates, were to be liquidated annually by lot, their total redemption to be effected in thirty years. At the same time, the _shizoku_, who from ancient times had devoted themselves to military and literary pursuits, despising industry and trade, now found themselves detached from their feudal lords on whom they had relied, and deprived of their lands and pensions. Receiving sums of money in commutation of their hereditary incomes, many