Army and to the work of the Civil Service, expresses the Sovereign's regret at the seditious agitation and disorders which have recently occurred in certain parts of India, and his determination firmly to repress them, but it adds that he will not be deterred by them from giving effect to the plans of progress and reform submitted to him by the Secretary of State and the Government of India.

The general scope of these plans was explained by Lord Morley in his speech in the House of Lords on December 17 (p. 248). There is to be no attempt to set up Parliamentary institutions in India, or anything that would lead to them, nor is there to be any material change in the general system of administration. But the people of India are to be admitted to a larger share in the government of the country by the enlargement of the powers of the Local Boards and of the Provincial and Viceroy's Legislative Councils. The proposals were received in India with general favour, and on December 24 an important deputation of about 100 persons, including the leading men of all parties in the two provinces of Bengal, waited on the Viceroy to present a loyal address expressing their gratitude. The Indian National Congress approved the plans on December 31; but the Mohammedan Conference at Amritsar found the proposed representation for Mohammedans inadequate.

VI. NATIVE STATES.

Nepal. The Prime Minister, Maharaja Sir Chandra Shumshere Jang, paid a long visit to England during the summer of 1908. To celebrate his return to Nepal a great Durbar was held at Katmandu on August 31, at which in the course of a long and able speech, describing the main incidents of his visit, he expressed himself as deeply touched by the warmth of the welcome given to him by all classes from the Sovereign downwards. At the Encania held on June 27, the University of Oxford conferred on him the honorary degree of Doctor of Civil Law.

Indore. The ex-Maharaja Holkar died in October. He had abdicated six years ago and had been succeeded by his minor son with a Council of Regency. He had kept his promise of not interfering in politics, and his death had no effect on the government of the State.

Hyderabad. In the closing days of September a most disastrous flood occurred at Hyderabad (Deccan); in consequence of thirty-six hours excessive and continuous rain the river Musi rose to a height of sixty feet, tanks burst, bridges were swept away, and the low-lying parts of the city were practically destroyed. In a memorandum on the work of relief issued in December the Prime Minister stated that fifty-two wards of the city had been almost ruined, 24,000 houses destroyed and 100,000 people rendered homeless. It was estimated that im

movable property to the value of one and a half crores and movable property to the value of one crore had been lost, and that the deaths amounted to 3,000. The Nizam and his Ministers and officials took prompt and energetic measures of relief, and the appeal for subscriptions was liberally responded to both in India and in England.

VII. TIBET.

There has been a steady improvement in the trade between India and Tibet; the returns for 1907-8 give its value at 39 lakhs of rupees, which is an increase of 17 lakhs in twelve months.

On April 20, the Convention between England and China relating to Tibet was signed in Calcutta. Its main provisions are that the Trade Regulations of 1893 are to remain in force except where specially modified; special provision is to be made for trial of disputes between British subjects and Tibetans and Chinese. China undertakes to protect the telegraph line from India to Gyantse, Great Britain undertaking to consider the question of making over the line to China when her telegraph system reaches that point; the British agents at trade marts are to arrange for posts to and from India; British officers and subjects are prohibited from travelling in Tibet without permission, otherwise than to and from the trade marts, and protection of travellers on these routes is made incumbent on the local authorities. The regulations are to remain in force for ten years, being then terminable upon six months' notice by either side.

The Dalai Lama arrived in Peking on September 28, with a large retinue and valuable presents for the Chinese Court. He was received with much ceremony, and during his stay, which lasted till December, when he started by train on his return to Tibet, he had frequent interviews with the authorities. The result of these has not been made known, but apparently there was much difference between his views and those of the Chinese Government. He seems to have desired to be recognised and supported by China as Sovereign of Tibet, whilst the Chinese Government not only insisted on the maintenance of its own sovereignty, but also wished to make even the Spiritual Power of the Dalai Lama dependent on his recognition by China.

It was reported at Shanghai in November that there was a general rising in Tibet, and that 10,000 Lamas had defeated the Chinese, and that the Amban had urgently asked for reinforcements. But no confirmation of this report has been received from India.

VIII. SIAM.

No event of importance occurred in Siam during 1908, and the arrangements made by the treaty with France of March,

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1907 (ANNUAL REGISTER, 1907, p. 387), appear to have been carried out without friction. Proposals for a treaty with Great Britain, it is believed on similar lines, namely concessions by Great Britain regarding British subjects in Siam in return for territorial compensation to the north of the Federated Malay States, were under discussion at Bangkok between the British representative and the Siamese Government for a considerable time, and were mentioned by the Foreign Secretary, Sir Edward Grey, in Parliament. But no treaty had been definitely concluded before the end of the year.

CHAPTER VI.

THE FAR EAST.

I. JAPAN.

CHARLES A. ROE.

THE financial position of Japan was the dominating factor in 1908 in her policy at home and abroad. The check on her exports, which followed on the commercial crisis in the United States in the previous autumn, had dealt a severe blow to the industrial activity which had reigned since the close of her war with Russia. But beyond the postponement of an expenditure of 120,000,000 yen on military, naval and other purposes, the Budget of 1908-9 made no allowance for the strain imposed upon the country by the existing taxation, but introduced fresh taxes and increased others. By these changes it was expected that an addition of 11,000,000 yen would be provided. The Ministers of Finance and Communications, who were strongly opposed to any curtailment of the programme of expenditure, resigned their portfolios. But the country was far from being in sympathy with them. In the House of Representatives a vote of censure on the Government for its faulty financial measures was only defeated by nine votes; and, though the Budget was eventually carried by a majority of 102, a strong feeling existed among the industrial and commercial classes that circumstances demanded a less heroic programme than that outlined by the Government in its provision for the naval and military services.

Marquis Saionji had been suspected of an inclination to resign the Premiership in February, and in July his resignation took place, apparently on the advice of the Elder Statesmen, the body whose place in a Parliamentary Government it is difficult to define, but whose voice the nation is ready to obey as representing the wisdom of mature years and the experience of its most eminent statesmen. A new Ministry was formed under the leadership of Marquis Katsura, who had been at the head of the Government which had distinguished itself by its able conduct of affairs during the war. Count Komura was recalled

from his post of Ambassador at St. James's to take charge of the Foreign Office, and the other portfolios were entrusted to a new set of Ministers, with the exception of General Terauchi and Admiral Saito, who remained at the War Office and Admiralty. Following on other changes, M. Kato, who had been Minister in London, 1894-9, was appointed Ambassador to England.

The new Ministry lost no time in effecting the change for which it had been appointed. The programme of expenditure was curtailed by 20,000,000l., of which nearly half was by economies in the army and navy. The period in which the extension of those services was to be effected was changed from six to eleven years. The State Railways were henceforth to form a separate account, and the profits on them for the next three years were to be devoted entirely to extension and improvement. The Sinking Fund appropriation was increased from 37,000,000 yen to 50,000,000 yen, and it was also decided that in view of the urgent occasion for economies, the exhibition in Japan should be postponed from 1912 to 1917. This was followed a few months later by a very striking Rescript in which the Emperor enjoined upon his people the duties of union, loyalty, frugality and simplicity.

Some irritation had been caused by the redemption of an internal war loan of 10,000,000l. due in December, by tenders at an earlier date, where applications for re-writing had been favoured, and it was in consequence announced that the Railway Nationalisation Bonds which would be issued in the next two years would be redeemable at their face value. The steps taken by the Government to secure its credit enabled it later on to issue two 5 per cent. loans in London and Paris of 2,000,0007. each at 977. and 971. 10s. for Korea and the South Manchuria Railway.

The forecast of the Budget for 1909-10 was framed in the same spirit of economy, allowing for a total revenue and expenditure of 543,630,000 yen. But in comparing this with that of 1908-9 (616,000,000 yen), it has to be borne in mind that the railway receipts and expenditure are no longer included in the Budget but form a separate account, in which interest on bonds (31,800,000 yen) and capital expenses (33,090,000 yen) form a total of 64,970,000 yen, against which have to be placed receipts estimated at 37,050,000 yen.

In the earlier part of 1908 the depression in all branches of trade was very marked. The export market was affected not only by the crisis in the United States but also by the depreciation of silver and the collapse in copper. With this condition of things imports very largely exceeded exports, but as the year wore on an improvement set in which raised the total of exports to 376,696,000 yen, as compared with imports of 435,687,000 yen.

Japan's difficulties as regards the emigration of her subjects to British Columbia and the United States had not been overcome, though Japan had shown great reasonableness in consenting to

restrict the movement. In January the Government issued an order prohibiting emigration to Hawaii, by which route the larger portion of the emigrants had found their way to California; and Chili and South America generally were recommended as a more favourable field. These concessions failed, however, to secure any abatement of the strong anti-Japanese feeling prevalent on the Pacific coast of North America, where the order issued to the United States battleship fleet to visit the Pacific waters was welcomed as a threat to Japan. The Japanese Government, by an invitation to visit Japan, converted the demonstration, if any such was intended, into a friendly visit, during which the utmost hospitality was lavished upon the visitors, and mutual assurances were given and exchanged that the feeling in California towards Japan could not be regarded as affecting the old friendship between the two great naval Powers of the present day in the Pacific.

Any irritation arising out of what was considered in the American commercial world as Japan's exclusive policy in Manchuria was removed by an exchange of notes at Washington (Nov. 30), soon after the departure of the United States fleet from Japan, under which the two Governments defined their policy as (1) the encouragement of the free and peaceful development of their commerce on the Pacific; (2) the maintenance of the status quo in those waters and of equal opportunity for the commerce and industry of all nations in China; (3) respect of each other's territorial possessions; (4) the support of the independence and integrity of China by all peaceful means; and (5) consultation with each other if any events arose threatening the status quo or the principles defined. This diplomatic action was welcomed in both countries and also approved by China, to whom the text of the notes was previously submitted.

A Treaty of Arbitration between the two Powers had been signed earlier in the year, and another Treaty to protect trademarks in China and Japan had been ratified. Throughout these and all her negotiations with the United States Japan maintained the same dignified attitude of respect for the President's declarations as to the friendly relations which his Government desired to maintain with Japan, while ignoring the clamour against Japanese which was persistently raised on the Pacific coast. In the same way, towards Canada, where Japanese immigration also excited ill-feeling in the West, Japan showed that she was ready to do all in her power to prohibit emigration beyond a certain figure. And this, though the restrictions. imposed a serious loss on her shipping companies, which were besides suffering from the diminution in the volume of trade generally.

Despite all the financial difficulties which faced her at home, Japan pursued the development of her projects in Formosa, Korea and Manchuria. The railroad in Formosa, forming an extension by 272 miles of the old Chinese railway (62 miles), from the