there are no roads, there are literally thousands of watercourses to be crossed, the rain transforms the plains into seas of mud, and the hills are so arduous that the Russian artillery found it impossible during times of peace, when brigand-hunting formed the sole diversion, to avoid working their horses to death in a two-days' march.

Although Japan has practically won all that she is fighting for, there is no guarantee that the war will cease in the immediate future. No nation humbled in its military pride likes to make peace; and so there is every possiblity that Russia will continue to make war although she has no chance of success. That the Japanese regard a long war as at least probable may be gathered both from their preparations and from the message of the Japanese Emperor to his people, which runs:

Since the commencement of hostilities our army and navy have displayed conspicuous loyalty and bravery, and with the officials and people, with united minds, complying with our instructions, we have hitherto steadily advanced by progressive steps.

Nevertheless, our prospects of final success are still distant. I earnestly hope that the sincerity of the national spirit will enable us to realize our final object.

This message is a distinct contrast to the bombastic proclamation with which the

Russian Government burdened Kuropatkin on the eve of his attempt to retake Liao-yang. Granted that the war will drag on its course through weary months, until Russia finally comes to see the uselessness of it all, it then becomes of interest to examine how the two nations are fitted financially, nationally, and economically for this test.

First and foremost, the Japanese have the enormous advantage arising from the fact that the whole of the

nation is unanimous upon this question of the war, and full of determination to carry it to a successful termination. On the other side, even amongst the people of Russian blood, there are many who would rejoice were the war to terminate, even without any Russian victory. Then the conquered races situated within the Empire, the Poles, the Finns, the Georgians, the Armenians, all these look upon Russia's defeat as the forerunner of better things for them. Hopes of freedom are aroused, and these subject races cannot be numbered amongst the resources of Russia. Those resources of Russia!-how much is spoken of them, and how little is seen! They remind us of the Humbert millions in the famous safe. The fable of the mountain in labor producing a mouse has its counterpart in Russia striving with this war. And the unfortunate Russian mouse has to run several thousands of miles before it can get to work. A divided people against a people unanimous means everything in favor of the latter, and in this respect Japan holds an advantage which is hard to over-estimate.

Then, again, the relative cost of the war must not be forgotten. Russia's bill is three times as great as that of Japan, and she has not even the satisfaction of being sure that much of the money spent does not go into the hands of fraululent contractors or officials. This freedom from corruption is another strong point in favor of Japan. A well-known authority upon Russia wrote recently:

The war is a terrible drain on the financial resources of the Empire. The savings of a number of years are being lavished in the span of a few months, after the lapse of which a cheque has to be drawn upon future economy. It is roughly calculated that during the first five months the needs of the cam

paign have swallowed up $431,014,668. In order to realize what this sum means, one would do well to remember

that it is nearly equal to all the receipts taken by the State from direct and indirect taxation. It is obvious, then, that one year of war must entail the expenditure of a sum equal to at least twice the revenue obtained by the Treasury from all sources of taxation. But as the current expenses of the administration continue and have also to be met, it follows that during one year of war the Government must spend three times more than it receives from the population during that time.

Baron Kaneko, dealing with the same subject as affecting Japan, writes:

As the fixed monthly revenue of the Japanese Government ranges all the way from £1,900,000 to £6,400,000, and as our war expenditure for this present fiscal year does not exceed £3,190,000 monthly, it is obvious that Japan can easily support the financial burden of the war, and will be able, from its financial resources, to tide the country over any difficulty in the near future.

The Russian Government, again, is loaded with foreign debts, no less than £36,000,000 being borrowed in the three years 1900-1903 alone. The total sum of money borrowed by Russia from France even is enough to make the thrifty French investor shudder and pray that Russia may never be forced to repudiate her debts. In Japan the case is very different. A Japanese writer states that:

From the year 1870, the date of our first national loan, to the date of the loan of £30,000,000 for the war expenditure, issued the present year, the gross total of our loans has aggregated the sum of £86,500,000 outstanding in foreign and home markets, a sum which in amount is about three times the national revenue of Japan.

Now, what of other countries? France, for example, has a national loan more than eight times the annual revenue of that country; Italy has a national loan equivalent to seven years of its revenue; in the case of England, the national loan represents about five

years of the Government's income; with the United States, nearly four times the total revenue equals the amount of the national loan.

Japan's entire national debts are but three times the national income, and only amount to some thirty-five shillings per capita. The Russian authority quoted above deals also with other sides of the question of the war. He

says:

In Russia proper, the symptoms of the crisis are many and alarming. Even in the two capitals, St. Petersburg and Moscow, scarcity of money, stagnation of trade, bankruptcy, and a large increase of the contingent of able-bodied paupers, beggars, and thieves mark some of the most obvious. consequences of the war, and as yet, unhappily, the high-water mark of destitution has not by any means been reached. . . . When a campaign directly cripples industrial and commercial enterprise, the effects are much worse than those which the war itself brings in the form of unproductive outlay.

It must also be remembered that Russian industry and commerce are very largely built up on credit, so that a war, which above all other things disturbs credit, is bound to have a disconcerting effect on all branches of business. That the war has really only hastened on economic troubles in Russia which promised to cripple her most effectually, may be gathered from the following:

But the greatest danger to Russian finances lies not so much in any of the transitory difficulties which the campaign against Japan has created as in the chronic poverty of the Russian people, who can no longer bear the burden of taxation. Forty years ago, when serfdom prevailed, the life of the average peasant was relatively tolerable. He dwelt in airy rooms adequately furnished, and owned horses, cattle, sheep, and poultry. Wood for fuel could be had in abundance, and he possessed

the needful materials to make his own clothing, boots and bed-coverings. Today, he lives in the smoky room of a squalid hut, which he shares with any four-footed animals he may possess, and for all the expenses of bringing up his family, tilling his land, repairing his dwelling, and paying rates and taxes he disposes at most of sixpence a day. On food for himself and his wife and children he can generally, but not always, spend three-halfpence a day. The difficulty not of increasing the taxes of such a man, but of maintaining them much longer at their present level, is too manifest to need pointing out. It is in this chronic impoverishment of the bulk of the people, therefore, and not in the acute crisis brought on by the war, that those who know Russia best discern the source of the coming troubles, economic and other, which they foresee but cannot prevent.

Thus the Russian Government has to face the problem of how to promote solidarity, to increase taxation, and to spend more money than can be received, without breaking down under the strain. The very economies effected in the Russian Budget bring disaster, since they have had as a result the throwing out of work in many districts of thousands of men. The most vital point in the whole Russian economic situation to-day is that, even were the peasants anxious to defray the cost of the war, it is impossible for them to pay more taxes. That this is no idle statement may be judged from the fact that in one of the prosperous districts of Russia the District Council reported, after investigation, that "The economic state of the peasantry is so straitened that further taxation is impossible without facing the risk of utterly ruining agriculture."

In this same district it was found that the peasant families were often paying as much as 34 per cent. of their incomes in taxes, 15 per cent. of which was in indirect taxation.

Already there are rumors that it

may be necessary for the Russian Government to draw upon the wealth of the Orthodox Church. This may well be a mere idle tale, but should it prove to have any foundation, no greater confession of weakness could be made. It is far more probable that foreign loans will be resorted to before the revenues of the Church; but foreign loans mean adding to the yearly expenditure, already unbearably heavy.

In Japan, on the other hand, the people are comparatively lightly taxed, the loans are low, and there is no difficulty to be foreseen in the way of increasing taxes and raising further loans. The most recent estimate of the probable cost of the war was made by Count Okuma, the veteran leader of the Progressives. Although it is not possible to regard his figures as absolutely accurate, the Japanese people rejoice at this evidence of optimism from one whose position has too often induced pessimism. Count Okuma said:

If the war lasts two years more the total cost to Japan will probably be from 1,200 to 1,300 million yen (£120,000,000 to £130,000,000). Therefore, together with the present debt and the cost of post bellum undertakings, the country's liabilities would aggregate 2,000 million yen (£200,000,000), which would nevertheless amount to only 40 yen (£4) a head of the population, whereas the Russian war outlays would approximate to 4,000 to 5,000 millions (£400,000,000 to £500,000,000).

As a means of gauging the amount of indebtedness which such a cost would mean, it may be remarked that in one of the Australian States a measure was regarded as a decided step towards retrenchment which proposed to limit the borrowing to a sum which represented 20s. per head per annum! And with regard to the actual expense of the war, not the relative cost, a very significant point was brought out in

a letter to the Globe by an old resident in Japan. He wrote:

It does not by any means follow that this enormous sum of money will be lost to Japan. This is the amount that the Japanese Government expect to spend, but the bulk of it will remain in the country. Japan manufactures all her field guns and their equipments, rifles and small arms, accoutrements, saddles, boots, clothing, blankets, &c. All ammunition is made at home, and many of the ingredients are found in the country, such as camphor, sulphur, &c. All her field telegraph is supplied at home; copper she has in abundance. Nearly all the food required for the army is grown in the country, with the exception of a few tinned meats, but the Japanese soldier prefers fish, and there are large salmon canneries in the Hokkaido. Of ponies and horses, up to the time I left, the supply was by no means exhausted. Japan has plenty of transports, drawn from her own mercantile marine; and for these she has an abundance of steam coal. For her warships, however, she prefers Cardiff coal, as it gives better results. She has her own docks and repairing and building yards, and with all the skilled labor required it is not necessary to import highly-paid foreign workmen. There is no doubt that she is busily engaged in building cruisers and destroyers.

From all this it can be plainly seen that Japan is practically self-sufficient, she having only to import such raw materials as steel, iron, lead, wool, &c. Therefore the only money lost to the country will be the cost of native coolie labor at the seat of war, and for railway work in Manchuria and other incidentals.

A striking proof of the truth of this has been afforded by the fact that during the months of the war itself the deposits in the Japanese Post Office savings banks have largely increased. Thus the great expenditures are causing much more money to be distributed throughout the country. It is estimated that over 70 per cent. of the expenditure is spent in Japan.

Baron Kaneko thus sums up the economic and financial conditions of Japan:

In a comparatively brief space of time there has been an enormous increase in our industrial and commercial prosperity; the national revenues have advanced in amount literally by leaps and bounds; our financial condition and prospects, even though we are carrying on a costly war, were never so good as at present; and firmly guiding her ship of state through the problems of the moment, Japan has every reason to anticipate a smooth and prosperous voyage for the future of her national life. Already the faith of the Japanese people in that future is shown by the fact that when the Government planned to issue exchequer bonds to the amount of £10,000,000 they responded with the offer of four or five times that amount, and in place of the minimum rate of application, fixed by the Government at 95 yen, showed their willingness to contribute a much larger sum. This of itself shows how patriotic the Japanese really are, but it also indicates something more, for as patriotic feeling cannot be manifested in such a matter unless there is enough money forthcoming, the taking up of bonds on such liberal terms reveals the existence of a people on whose thrift-a priceless national possession-the Government of Japan can always depend. . . . In all this patriotism there is an element of voluntary retrenchment, not to say self-sacrifice. Not only have our people felt encouraged to engage more extensively in industrial enterprises-they have freely given up what is known as "luxurious expenditure," and have resorted to not a few of the practical economies of life as a means of enabling them to contribute all the more to the expenses of the war. It is therefore in the self-confidence born of economic strength that the Japanese people have encouraged their Government to prosecute this war to its conclusion utterly regardless of financial considerations and of what the operations may cost. They have determined, should it become necessary, to

spend the whole of the national wealth in realizing the objects for which hostilities were begun. They have selfreliance enough to feel that, should the war be prolonged for three, or even five, years more, Japan will be strong enough to respond to its most exacting demands upon her economic and financial resources.

Both nations may be determined to fight to the last man, and to spend their last penny in carrying on the war; but the Japanese last penny is much less imminent than the Russian one, and it is probable that neither nation will reach anything like the last man. As Japan has won the war on sea and on land, so she has in advance won the financial battle. By wise and foreseeing measures of taxation and finance, Japan has prepared for this war as thoroughly in her Ministry of Finance as in her Ministries of Marine and of Army.

To sum up, it may be said that Russia has lost, and will continue to lose, not so much perhaps because of the superiority of her adversaries, although there is sufficient proof of this, but for the following reasons-lack of preparation, lack of plans, lack of unanimity as a government or as a nation: all these are enormous obstacles in the way of success. The distance from the base in Russia, the bad quality of the majority of the Russian officers, the prevalence of corruption even in the highest quarters, the loss of the command of the sea, which the Baltic Fleet will never restore to Russia; these, added to the list given above, render it impossible for Russia to succeed. It must not be forgotten that Japan, lying far away from any other first-class Power, can reduce herself to the last straits with comparative impunity, whereas Russia is sufficiently

The Fortnightly Review.

near other Powers for her to regard a serious weakening as an almost fatal event. The Siberian line has indeed proved the rope by which Russia has hanged herself, and the sooner her rulers or friends decide to cut her down and revive her the more the world should rejoice. Russia has been defeated as much by circumstances as by the Japanese. Over the circumstances she can well plead that she has no control, but that does not excuse her culpable ignorance in overlooking their existence. In many ways Russia is to be pitied, and many worse things might happen than a cordial understanding between England and Japan on the one hand, and France and a chastened Russia on the other. The first step has been taken in the entente between England and France. On both sides one of the nations would come chastened in spirit-England by the South African war, and Russia by the war with Japan. Such an entente would make for the peace of the world. Russia is much less of a danger to the British Empire than is Germany, and if, after the war, Russia were to seek an amicable arrangement with Japan, her ally, the idea might well be entertained. But the wish must come from Russia to both the allies; any idea that Japan would throw over her ally in order to curry favor with Russia, as suggested by the Master of Elibank in his singularly ill-advised letter in the Times, is so absurd that Baron Suyematsu's answering letter was scarcely needed. We may be assured that there will be no attempt even to keep only to the letter of the alliance by our ally, however events might arise which would render such a course advantageous to Japan. Japan is a sincere, honest nation, and in this, as in many other directions, sets an example which other nations would do well to follow.

Alfred Stead.