“The last portion of our frontier marches with Korea, a country with an area of 80,000 square miles, and containing a population of at least 11,000,000, amongst whom are only some 2,000 to 10,000 Chinese, 45,000 to 55,000 Japanese, and some 300 Europeans.[31] The position of Korea is peculiar; she is subordinate both to China and Japan, and yet, since 1897—by the agreement between ourselves and the latter Power—her independence has been acknowledged. Extreme caution is therefore demanded in our dealings with and our policy concerning her. Though we feel no necessity to annex the country ourselves, we can under no circumstances consent to the establishment in it of an energetic Japan or any other Power. For the present, a Korea, weak, independent, but under our protection, is for us the simplest solution of the question. The immediate establishment of a Protectorate would not only necessitate all sorts of expense, but might drag us unprepared into war. And so in this case, just as in Persia and in North China, we must work systematically towards gradually acquiring absolute economic control of the country. The occupation of the Kuan-tung Peninsula, the permanent fortification of our position there, and the completion of the roads running through Manchuria, are steps in advance, and important ones, in this problem of the future. _At present we are in no way ready to take an active line in Korea, and must, at any cost, avoid stirring up a conflict with Japan on account of Korean affairs._ “We are certain to encounter Japan’s strenuous opposition in our endeavour to obtain control of the Korean markets, even if it be only in the shape of political or mere trade competition, and if we cannot altogether avoid a conflict, we shall in all probability have to fight her in the beginning of the twentieth century.”