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 By the words 'Far East' I mean ten political aggregates: the Malay Peninsula, the Dutch Indies, Siam, North Borneo, Indo-China, China, Korea, the Philippines, Japan, and the Pacific Islands. It is impossible to explain the cable position in that vast region without a few words upon the factors governing its trade and politics, for trade feeds and politics regulate the number and nationality of the cables.

(a) Viewed very broadly, the foreign trade of the majority of those countries is less expansive than enthusiasts suppose. As the best authority. Sir Robert Hart, has said, 'China needs neither import nor export &hellip; the sanguine expectations &hellip; have never been realized.' The Chinese have the best food, rice, the best drink, tea, and the best clothing, cotton, silk, and fur, so that foreign trade is not a necessity to them. Similarly with several of the other Eastern peoples.

(b) Another great obstacle to trade expansion has been, and still is, currency. I find that the gold exchange of the silver Haikwan tael fell steadily, with the exception of five short upward fluctuations, from 6s. 6d. in 1870 to 3s. 83d. in 1894. In the next ten years, up to date, it has fluctuated violently, but, on the whole, in a downward direction, attaining its minimum of 2s. 4¾d. in March, 1903. If silver, the wholesale currency, thus varies in relation to gold, so copper, the currency of the people, varies in relation to silver. Hence a double-lever state of disturbed equilibrium exercising a prejudicial effect on foreign trade.

(c) Against this, no doubt, is the miraculous expansion of Japan with her gold standard. It would seem from the Japanese trade returns that her foreign trade doubled decennially from 1868 to 1888, and septennially since then. Thus her trade, which was £2,700,000 in 1868, was £54,000,000 in 1902, and, reckoning at the same