0 yen
(L7,169,927) to 85,000,000 yen (L8,706,340), of which sum 22,000,000
yen were advanced to the Government without interest. This sum added
to the original reserve fund of 10,000,000 yen (L1,024,275) was
employed for completing the redemption of paper-money of 1 yen and
upward. Subsequent loans for the purposes of the war with Russia I
have already referred to. Besides funded Japan has also, like this
country, had experience of unfunded debt in the shape of Treasury
Bills, temporary loans from the Bank of Japan, &c. Financial
operations of this kind are, however, I imagine, necessary for all
Governments to meet current expenses. To briefly recapitulate Japan's
indebtedness and borrowings generally up to the end of March, 1905,
these amounted to, in all, L140,045,030, of which sum L38,187,369 has
from time to time been paid off, leaving a balance of L101,857,661
owing by the nation.

When we consider that for this large, but not unduly large, sum Japan
has waged two considerable wars, and raised herself to the position of
a great naval and military Power, that she has developed and organised
a magnificent Army, provided herself with a strong, efficient, and
thoroughly up-to-date Navy, has constructed railways and public works,
and generally has placed herself in a capital position to work out her
own destiny free from the fear of foreign interference, I altogether
fail to see how she can be accused of financial extravagance. There is
certainly no extravagance in the administration of her finances.
London might, I suggest, learn much from Tokio in this matter. The
system of financial check and thorough and rapid audit of public
accounts is in Japan as near perfection as anything of the kind can
be. Though the late war did produce, as I suppose all wars do,
peculation, most of it was discovered and the punishment of the
culprits was sharp and decisive. There was no opportunity for
financial scandals in the campaign with Russia such as occurred during
the South African War. Every country, of course, produces rogues, and
war seems, _inter alia_, to breed roguery on a large scale, but in the
Japanese methods of finance the checks are so effective that roguery
in the public services has a bad time of it in war as well as in
peace.

As I have already remarked, I am of opinion the debt of Japan is by no
means excessive, especially in view of the fact that a large part of
it has been devoted to purposes which are profitabl