elaborately fitted up with every possible convenience, was designated as the scene of the sessions. [Sidenote: The Japanese Terms] The first meeting of the envoys was held on August 9. The Japanese terms were presented in twelve sections, as follows: I. Recognition of Japan's "preponderating influence" in Korea. II. Mutual obligations to evacuate Manchuria, Russia to retrocede to China all special privileges. III. Japanese obligations to restore the sovereignty and administration of China in Manchuria. IV. Mutual obligations to respect the territorial and administrative integrity of China and the principle of the "open door." V. The cession of the Island of Saghalien. VI. The surrender of the Russian leases in the Liaotung Peninsula, including Port Arthur, Dalny and the Blonde and Elliott Islands. VII. The cession of the branch of the Chinese Eastern Railroad from Harbin southward. VIII. The retention by Russia of that portion of the railroad line through northern Manchuria connecting the Transsiberian road with Vladivostock. IX. The reimbursement of Japan for the war--commonly spoken of as the indemnity. X. The surrender of Russian warships which have been interned in neutral ports during the war. XI. The limitation of Russia's naval forces in the Pacific. XII. The question of fishing rights of Russia and Japan off the Siberian coast. [Sidenote: Japan Makes Peace Possible] These demands, one by one, were discussed by the envoys. It developed that Russia absolutely refused to grant an indemnity, to surrender warships interned in Chinese and American ports, or to cede to Japan the Island of Saghalien. Whatever hope of compromise there seemed to be with regard to the other questions at issue it was regarded as absolutely essential to the signing of a treaty of peace that Russia should yield on the subject of indemnity. The President's efforts were directed toward accomplishing this result under some other name than indemnity. It was proposed to arrange for the payment of the amount demanded as a purchase price for Saghalien, or for the railway rights over which Japan had become master. No compromise would be listened to by the Czar, "Not a kopeck for indemnity," was the phrase of M. Witte, and there was no yielding. By shrewd diplomatic manoeuvring the Russian envoy had placed Japan in a position which meant that were the war to be continued it would be upon the responsibility of Japan and for the sole reason that money must be had. The Tokio government, after long discussion, decided upon a magnanimous course, which at once won the encomiums of the whole civilized world. She yielded every point in dispute, gave up her demand for indemnity, gave up half of Saghalien, gave up her claim upon the interned warships and, though triumphantly victorious in every step of the war, accepted terms of peace dictated by the nation she had conquered, and this "in the name of humanity."