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 yen, of which 135,000,000 yen were added to the national debt, the remainder being defrayed with accumulations of surplus revenue, with a part of the indemnity received from China, and with voluntary contributions from patriotic subjects. As the immediate sequel of the war, the government elaborated a large programme of armaments and public works. The expenditure for these unproductive purposes, as well as for coast fortifications, dockyards, and so on, came to 314,000,000 yen, and the total of the productive expenditures included in the programme was 190,000,000 yen—namely, 120 millions for railways, telegraphs and telephones; 20 millions for riparian improvements; 20 millions in aid of industrial and agricultural banks and so forth—the whole programme thus involving an outlay of 504,000,000 yen. To meet this large figure, the Chinese indemnity, surpluses of annual revenue and other assets, furnished 300 millions; and it was decided that the remaining 204 millions should be obtained by domestic loans, the programme to be carried completely into operation—with trifling exceptions—by the year 1905. In practice, however, it was found impossible to obtain money at home without paying a high rate of interest. The government, therefore, had recourse to the London market in 1899, raising a loan of £10,000,000 at 4%, and selling the £100 bonds at 90. In 1902, it was not expected that Japan would need any further immediate recourse to foreign borrowing. According to her financiers’ forecast at that time, her national indebtedness would reach its maximum, namely, 575,000,000 yen, in the year 1903, and would thenceforward diminish steadily. All Japan’s domestic loans were by that time placed on a uniform basis. They carried 5% interest, ran for a period of 5 years without redemption, and were then to be redeemed within 50 years at latest. The treasury had power to expedite the operation of redemption according to financial convenience, but the sum expended on amortization each year must receive the previous consent of the diet. Within the limit of that sum redemption was effected either by purchasing the stock of the loans in the open market or by drawing lots to determine the bonds to be paid off. During the first two periods (1867 to 1897) of the Meiji era, owing to the processes of conversion, consolidation, &amp;c., and to the various requirements of the state’s progress, twenty-two different kinds of national bonds were issued; they aggregated 673,215,500 yen; 269,042,198 yen of that total had been paid off at the close of 1897, and the remainder was to be redeemed by 1946, according to these programmes.

But at this point the empire became involved in war with Russia, and the enormous resulting outlays caused a signal change in the financial situation. Before peace was restored in the autumn of 1905, Japan had been obliged to borrow 405,000,000 yen at home and 1,054,000,000 abroad, so that she found herself in 1908 with a total debt of 2,276,000,000 yen, of which aggregate her domestic indebtedness stood for 1,110,000,000 and her foreign borrowings amounted to 1,166,000,000. This meant that her debt had grown from 561,000,000 yen in 1904 to 2,276,000,000 yen in 1908; or from 11.3 yen to 43.8 yen per head of the population. Further, out of the grand total, the sum actually spent on account of war and armaments represented 1,357,000,000 yen. The debt carried interest varying from 4 to 5%.

It will be observed that the country’s indebtedness grew by 1,700,000,000 yen, in round numbers, owing to the war with Russia. This added obligation the government resolved to discharge within the space of 30 years, for which purpose the diet was asked to approve the establishment of a national debt consolidation fund, which should be kept distinct from the general accounts of revenue and expenditure, and specially applied to payment of interest and redemption of principal. The amount of this fund was never to fall below 110,000,000 yen annually. Immediately after the war, the diet approved a cabinet proposal for the nationalization of 17 private railways, at a cost of 500,000,000 yen, and this brought the state’s debts to 2,776,000,000 yen in all. The people becoming impatient of this large burden, a scheme was finally adopted in 1908 for appropriating a sum of at least 50,000,000 yen annually to the purpose of redemption.

Local Finance.—Between 1878 and 1888 a system of local autonomy in matters of finance was fully established. Under this system the total expenditures of the various corporations in the last year of each quinquennial period commencing from the fiscal year 1889–1890 were as follow:—

In the same years the total indebtedness of the corporations was:—

The chief purposes to which the proceeds of these loans were applied are as follow:—

Local corporations are not competent to incur unrestricted indebtedness. The endorsement of the local assembly must be secured; redemption must commence within 3 years after the date of issue and be completed within 30 years; and, except in the case of very small loans, the sanction of the minister of home affairs must be obtained.

Wealth of Japan.—With reference to the wealth of Japan, there is no official census. So far as can be estimated from statistics for the year 1904–1905, the wealth of Japan proper, excluding Formosa, Sakhalin and some rights in Manchuria, amounts to about 19,896,000,000 yen, the items of which are as follow:—

Education.—There is no room to doubt that the literature and learning of China and Korea were transported to Japan in very ancient times, but tradition is the sole authority for current statements that in the 3rd century a Korean immigrant was appointed historiographer to the Imperial

court of Japan and another learned man from the same country introduced the Japanese to the treasures of Chinese literature. About the end of the 6th century the Japanese court began to send civilians and religionists direct to China, there to study Confucianism and Buddhism, and among these travellers there were some who passed as much as 25 or 30 years beyond the sea. The knowledge acquired by these students was crystallized into a body of laws and ordinances based on the administrative and legal systems of the Sui dynasty in China, and in the middle of the 7th century the first Japanese school seems to have been established by the emperor Tenchi, followed some 50 years later by the first university. Nara was the site of the latter, and the subjects of study were ethics, law, history and mathematics.

Not until 794, the date of the transfer of the capital to Kiōto, however, is there any evidence of educational organization on a considerable scale. A university was then opened in the capital, with affiliated colleges; and local schools were built and endowed by noble families, to whose scions admittance was restricted, but for general education one institution only appears to have been provided. In this Kiōto university the curriculum included the Chinese classics, calligraphy, history, law, etiquette, arithmetic and composition; while in the affiliated colleges special subjects were taught, as medicine, herbalism, acupuncture, shampooing, divination, the almanac and languages. Admission was limited to youths of high social grade; the students aggregated some 400, from 13 to 16 years of age; the faculty included professors and teachers, who were known by the same titles (hakase and shi) as those applied to their successors to-day; and the government supplied food and clothing as well as books. The family schools numbered five, and their patrons were the Wage, the Fujiwara, the Tachibana (one school each) and the Minamoto (two). At the one institution—opened in 828—where youths in general might receive instruction, the course