r, for there was little chance, in my judgment, of the war
turning out favorably for Russia, and the revolutionary movement already
under way bade fair to overthrow the negotiations entirely. I advised
the Russian Government to this effect, at the same time urging them to
abandon their pretensions on certain other points, notably concerning
the southern half of Saghalien, which the Japanese had taken. I also,
however, and equally strongly, advised the Japanese that in my judgment
it would be the gravest mistake on their part to insist on continuing
the war for the sake of a money indemnity; for Russia was absolutely
firm in refusing to give them an indemnity, and the longer the war
continued the less able she would be to pay. I pointed out that there
was no possible analogy between their case and that of Germany in the
war with France, which they were fond of quoting. The Germans held Paris
and half of France, and gave up much territory in lieu of the indemnity,
whereas the Japanese were still many thousand miles from Moscow, and had
no territory whatever which they wished to give up. I also pointed out
that in my judgment whereas the Japanese had enjoyed the sympathy of
most of the civilized powers at the outset of and during the continuance
of the war, they would forfeit it if they turned the war into one merely
for getting money--and, moreover, they would almost certainly fail to
get the money, and would simply find themselves at the end of a year,
even if things prospered with them, in possession of territory they
did not want, having spent enormous additional sums of money, and
lost enormous additional numbers of men, and yet without a penny of
remuneration. The treaty of peace was finally signed.

As is inevitable under such circumstances, each side felt that it ought
to have got better terms; and when the danger was well past each side
felt that it had been over-reached by the other, and that if the war had
gone on it would have gotten more than it actually did get. The Japanese
Government had been wise throughout, except in the matter of announcing
that it would insist on a money indemnity. Neither in national nor in
private affairs is it ordinarily advisable to make a bluff which cannot
be put through--personally, I never believe in doing it under any
circumstances. The Japanese people had been misled by this bluff of
their Government; and the unwisdom of the Government's action in the
matter was shown by the gr