public, but in 1897–98 only a third of the sum needed could be obtained, because the conditions of the market were too unfavourable and disposable capital was lacking. Whereas in the summer of 1897 £4,000,000 of a 5 per cent. Japanese loan was floated on the London market at par, the Government offered the Japanese people bonds bearing the same interest at 94, but they were not placed without much difficulty. All the capital in Japan is locked up either in previously contracted State loans or in the innumerable commercial enterprises which have sprung up in the country during the past few years. When we remember that nine-tenths of the £40,000,000, at which the National Debt stood after the war, is in Japanese hands, and that it is with their own money that they have constructed railways and established new industries, there is no ground for surprise at this lack of ready capital. In view, however, of the evident impossibility of placing a domestic loan for the sum required, two alternatives remained: a foreign loan, or a reduction to more modest proportion of the programme of expansion. The result of an appeal to foreign capitalists would no doubt have proved successful if the attractive interest of from 5 to 5¼ per cent. had been offered. Japan offers excellent security. Her finances have hitherto been admirably managed, and her liabilities do not appear to be in excess of the capabilities of her people. Nevertheless, the project of a foreign loan seems to have met with serious opposition from many eminent people in Japan, which arose from a twofold cause: first, fear of compromising the independence of the country by supplying foreigners with a pretext for interfering in the internal affairs of the Empire, in case there was any difficulty in fulfilling obligations; and, secondly, the national pride, which regarded it as humiliating for Japan to become indebted to Europe. This latter motive was doubtless the most powerful, but it rested upon an altogether exaggerated notion of national dignity. What all the great Powers of the world, except, perhaps, France and England, have done, Japan might do without sacrificing her dignity. The Japanese Government, after long hesitation, in which it perhaps missed the most favourable opportunity, decided in June, 1899, to issue a 4 per cent. loan on the London market at the rate of 90 francs. The high rate of issue did not greatly tempt the public, but that part of the loan not then subscribed will be gradually issued and advanced by the banks which undertook the issue, and thus the Japanese Treasury will find itself in possession of sufficient funds to proceed with its programme until money is more plentiful at home. In the meantime, so far as concerns the honourable intentions of the Japanese to fulfil their obligations, we may rely with safety upon their natural high sense of honour, and rest assured that they will do everything in their power to meet their obligations.