Immense sums were spent on the creation of the town of Dalny, on the Eastern Chinese Railway and its palatial offices in Harbin, and on the services connected with it. For this latter enterprise, which was both a commercial and State proposition (private as regards management, and official as regards the supply of funds), the money was mostly obtained from the so-called “surpluses.” These “surpluses” expanded in a manner unprecedented in the financial records, not only of our own country, but probably of the world, and in our case much to the detriment of the most pressing needs of all departments. The idea underlying the creation of a surplus was simplicity itself. While all demands for money made by the different departments were cut down, the estimated receipts from revenue were also reduced. The results were amazing. The excess of receipts over expenditure at a time when the most pressing requirements for national defence could not be met for lack of funds amounted in some years to over £20,000,000. The following table gives the “errors” in estimating made by the Finance Minister in calculating the revenue between 1894–1905: +-----+-----------------------+-----------+ | | The Revenue. | Actual | | +-----------+-----------+Excess over| | | Estimated.| Actual. | Estimate. | | +-----------+-----------+-----------+ | | £ | £ | £ | |1894 |100,482,327|115,378,581| 14,896,253| |1895 |114,295,700|125,581,878| 11,286,177| |1896 |123,947,169|136,871,935| 12,924,765| |1897 |131,836,649|141,638,609| 9,801,960| |1898 |136,445,821|158,485,444| 22,039,622| |1899 |146,912,820|167,331,306| 20,418,485| |1900 |159,374,568|170,412,850| 11,038,282| |1901 |173,009,600|179,945,715| 6,936,114| |1902 |180,078,448|190,540,444| 10,461,995| |1903 |189,703,267|203,180,081| 13,476,813| |1904 |198,009,449|201,826,131| 3,816,682| |1905 |197,704,561|202,443,193| 4,738,631| +-----+-----------+-----------+-----------+ This shows— (_a_) That the difference between the estimated and actual receipts amounted in 1898 and 1899 to more than £20,000,000 _per annum_. (_b_) That in eight years out of twelve the actual income exceeded the estimates by £10,000,000 _per annum_. (_c_) That the revenue was little affected by the war, and that for 1904 and 1905 the excess of income over estimates was more than £8,000,000. Had the calculations as to receipts, therefore, been more accurate, it would have been quite possible to grant to the War Ministry the supplementary sum asked for, and thus to enable our preparations to have been more complete in east and west.