the fact of two previous loans and the exhaustion of the
country incidental to a long and expensive war, she was able to place
on the market a loan of thirty millions at 4-1/2 per cent. interest, the
issue price being L90.

A National Debt which amounts to less than L2 per head of the
population compares very favourably with that of Great Britain, which
totals up to something like L19 per head, leaving out of account the
immense and yearly growing indebtedness of our great cities and towns.
Furthermore, almost the whole of the National Debt of this country, as
of the European Powers generally, has been incurred not only for
unproductive, but as a matter of fact for destructive purposes. The
vast loans of Europe have been raised for the purpose of waging bloody
wars, some at least of which history has pronounced to have been
gigantic, not to say wicked, blunders. Much of the National Debt of
Japan, on the contrary, has been incurred for useful, productive, and
even remunerative purposes--improving the means of transport,
constructing railways, &c. The various loans outstanding up to the
year 1887, on which Japan was paying very high rates of interest, as
much as 9 per cent. on one foreign loan, were in that year converted
and consolidated by the issue of a loan bearing interest at the rate
of 5 per cent. per annum--a proceeding which materially improved
Japan's financial position and demonstrated that her credit stood
high.

The war with China in 1894-5 necessitated fresh borrowing to the
amount of over L12,000,000. Subsequent loans were issued in order to
extend the railway system of the country and so develop its trade, for
such public works as the establishment of a steel foundry, the
extension of the telephone system, the introduction of the leaf
tobacco monopoly, for the development of Formosa and, another most
important matter, the redemption of paper-money. In the early days of
her expansion Japan suffered greatly from the evils of inconvertible
paper-money and strenuous efforts had for a long time been made by the
Government for the redemption of the paper-money and the improvement
of the general financial condition. In 1890 it was found that the
reserve fund kept in the Treasury for the exchange of paper-money of
1 yen and upwards was insufficient to meet the demand. To meet this
emergency, the maximum amount of convertible bank-notes issued by the
Bank of Japan against securities was increased from 70,000,00