yen; public home civil service, 19,236,444 yen; diplomatic and consular service, 500,000 yen. The Civil List, including the appanages of the members of the Imperial family, amounts to only 877,000 yen, or 175,400l.; pensions amount to 1,059,404 yen; administration of the cities and provinces, 3,786,700 yen ; buildings and embankments, 1,987,000 yen; industrial undertakings, 1,005,084 yen; temples, 135,000 yen; miscellaneous expenditure, 1,877,814 yen; reserve, 1,500,000. Among the subheads of home civil service we find 300,000 yen set down for the Council of State, 170,000 yen for the Department of Foreign Affairs, 1,314,800 yen for the Administration of Justice, and 1,139,870 yen for the Department of Education. The public debt amounts to 250 millions of yen, or about 50 millions sterling. But very nearly four-fifths of this partake of the character of our terminable annuities. When, some years ago, the Japanese political system was reorganised and the pre-existing feudal arrangements extinguished, the Government took upon itself the obligation of providing for the "Samurai," or feudal retainers of the Daimios, and also for some colleges of priests. But, at the same time, it took over the ownership of various parcels of land scattered over the country which had been previously burdened with those charges. These lands are let at a very moderate rate, and it is the income derived from this source which figures as "land-tax," and is such an important item of State revenue, amounting to about 75 per cent. of the whole. The charges for which this fund is primarily liable will be extinguished in about twenty-five years, while the lands and their income will remain the property of the State. The interest paid on the several portions of the public debt varies from 4 to 9 per cent., the average being 6 per cent. This must be considered satisfactory, since the ordinary rate of domestic interest in Japan is from 12 to 15 per cent., and the Chinese Government has had to pay 8 per cent. on its last loan. The population of Japan is about 34 millions. The peace establishment of the army is fixed at one man for every thousand of the population, exactly one-tenth of the ratio fixed for the German Empire. The military charge amounts to 9 15-17d. per head of the population, and the total amount of taxation, properly so called, is only a minute fraction more than 18. 2 d. per head.

CHAPTER VIII.

AFRICA.

I. EGYPT.

AFTER ten years and more of feverish agitation, culminating in the collapse of the arch agitator, Egypt has devoted the past twelve months to the dull monotonous task of paying her debts. Under pressure from without, she has learnt the maxim of the policy of honesty, and strange to say that, whilst her creditors are satisfied, she herself seems in no way impoverished. The amazing fertility of the soil, the patient laboriousness of the fellaheen, and the other resources of the country which had hitherto been used to attract the avarice of speculators, at length began to commend themselves to the confidence of investors. The history of 1880, as far as Egypt is concerned, is the history of the restoration of her credit, and of her fair start on the road to commercial and agricultural wealth. The leading strings in which the Khedive consented to carry on the government may, on various occasions, have galled him not a little, but great praise is due to Tewfik Pasha for his unswerving loyalty to the Powers who placed him on the throne, and for the strict impartiality with which he has listened to the recommendations of the rival Powers. On more than one occasion he supported his own Ministry against their demands; but more frequently his influence was invoked, and not in vain, to prove to his Cabinet and subjects the necessity of submitting without a murmur to the necessities of the political or financial situation. The latter was the more critical. From the very first moment of his advent to power he had been forced to face two inevitable changes-the reduction in the rate of interest on Government bonds, and the abolition of the Moukabalah tax, in reality a double tax on all landowners, and one of the latest devices of the ex-Khedive. Under a promise that all landowners paying for a series of years a double tax should subsequently only pay one-half of the regular land-tax, Ismael Pasha had aroused hopes of permanent relief which he never intended to realise; whilst in like manner his assurance to his creditors and the European Powers that the proceeds of the double tax would be devoted to paying off the public debt was merely intended as a cloak for further extravagance and folly. The result showed that the double payment was practically impossible. When the Moukabalah was regularly paid, the ordinary land-tax fell into arrear, and when the ordinary tax was paid the Moukabalah was neglected. The tax had been useful to the ex-Khedive as a means for obtaining short loans at an exorbitant rate of interest, and had been one of the origins of the floating debt of six millions, contracted within three years, with which the European Controllers had to deal.

Early in January the financial report of the Controllers was presented to the Viceroy. In it the difficulties of the situation were in no way palliated; at the same time the possibility of re-establishing Egyptian credit was never doubted, if only the Egyptian Government would undertake "to draw a distinct line of demarcation between the past and the future, and to decide that by the enforcement of a new law all claims prior to its promulgation should be finally liquidated." With this object the Commission of Inquiry proposed the insertion of the following clause in the new law :

:

"From the date of the publication of this law no privilege or mortgage debt shall be registered, and no seizure shall be made, and no proceedings taken in the nature of sequester or execution in virtue of any right of action acquired against the Government previous to

To this report the Khedive replied by fixing the time of demarcation between the future and the past at December 31, 1879. He also resolved to maintain at 5 per cent. the rate of interest on the Privileged Debt; to pay a minimum rate of interest of 41. per cent. on the Unified Debt; to convert short loans into bonds of the Unified Debt; and to make a special arrangement for the claims of the Paris Syndicate.

The report of the Controllers was promptly followed by the publication of the budget, which was, in general opinion, based upon a very fair and liberal estimate of the requirements of the public service. The land revenue was thought by some to have been fixed at a somewhat high figure, seeing that the area of taxable land barely exceeds four and a half millions of acres; but in other respects the budget was of most modest proportions as compared with that for 1879, framed for financial and speculative reasons, which promised a revenue of nearly eleven millions sterling.

The actual figures of the Budget of 1880, as approved, were—

In this estimate, as will be seen, the interest on the Unified Debt had been calculated at 4 per cent., at which rate it had been provisionally fixed by the Commission of Inquiry of the previous year, and for the present, in spite of the pressure brought to bear upon the Government and the Controllers, any higher rate of payment seemed impossible. The public debt of Egypt was probably not out of proportion to its resources had there been means at hand to develop them; for, as will be seen from the following résumé, the indebtedness of the country was not more than thirteen times its annual income:

The real weakness of Egypt's position, however, lay in the very limited extent of her commerce compared with countries of similar population, which forced the framers of the budget to observe 'The annexed figures, taken from official returns, show the commercial position of Egypt:

more than ordinary caution, and to abstain from overtaxing crops, the natural sources of revenue.

It must not be imagined that the European Controllers were able without friction to carry out all these projected reforms, although they had succeeded in framing a budget which, by lightening the burden on the public, materially added to the popularity of the new Khedive and his Cabinet. The holders of the Unified Debt, in whose favour specific sources of revenue had been set aside; the creditors of the Domain Lands, who looked to the Moukabalah for payment, were amongst the chief opponents of the new plan; and, at one time, it seemed as if the Government was about to give way to the Unified Bondholders. The Controllers and Commissioners of the Public Debt, however, remained firm, and on February 24 the President of the Council of Ministers addressed to the Commissioners a formal surrender of the principal points in dispute. The Customs receipts were to be paid into the public Treasury, though certain other revenues recently diverted from the service of the Funded Debt were necessarily for a time retained. In the President's letter reference was made to the goodwill with which the recommendations of the once famous European Commission of Inquiry had been carried out; the personal tax and many smaller imposts were abolished, the salt-tax was reformed, the Uchowry land-tax increased, and forced labour placed under control. The Khedive, the letter went on to show, had already paid more than a million and a half of his father's debts towards the mortgage creditors; and was ready to come to terms with the holders of the floating debt. "But," said the President of the Council, "we are stopped by the international principle which prevents Egypt from making her own laws and decrees without the consent of fourteen Powers. We are further delayed by Messrs. Rothschild, who refuse to pay over the residue of their loan unless their lands are declared free from taxation. The Government is also attacked by holders of the Funded Debt for the arrears of the coupons, amounting to 1,700,000l., which everybody knows the country could not pay. If these claims are admitted, the number of unpaid judgments will be greatly increased. Even if Messrs. Rothschild pay the money which was obtained by the sacrifice of the Viceregal lands, one of the fourteen Powers can stop the Government from freely using it, as was done lately when the arrears of tribute and the pensioners were proposed to be settled, and Greece would not allow it as long as any judgments remain unpaid. In short, Egypt contains all the elements of a durable prosperity. The Government has commenced reforms which will enable that prosperity to develop; the most perfect harmony exists between the Controllers and the Ministers. But all these elements of prosperity are paralysed by the check imposed on our legislative powers by the principle of internationality. A Government cannot live unless it can make laws. Either, therefore, the Egyptian Government must be allowed