For China, instead of being nearly bankrupt as so many have asserted, has, thanks to the new scale of indebtedness which the war has established, become one of the most debt-free countries in the world, her entire national debt (exclusive of railway debt) amounting to less than 150 millions sterling, or seven shillings per head of population, which is certainly not very terrible.  No student who has given due attention to the question can deny that it is primarily on the proper handling of this nexus of financial interests, and not by establishing any artificial balance of power between foreign nations, that the peace of the Far East really hinges.  The method of securing national redemption is ready-made:  Western nations should use the Parliament of China as an instrument of reform, and by limiting themselves to this one method secure that civil authority is reinforced to such a point that its behests have behind them all the wealth of the West.  In questions of currency, taxation, railways and every other vexatious problem, it is solely by using this instrument that satisfactory results can be attained.[29] For once Chinese realize that parliamentary government is not merely an experimental thing but the last chance the country is to be given to govern itself, they will rally to the call and prove that much of the trouble and turmoil of past years has been due to the misunderstanding of the internal problem by Western minds which has incited the population to intrigue against one another and remain disunited.  And if we insist that there is urgent need for a settlement of these matters in the terms we have indicated, it is because we know very precisely what Japanese thought on this subject really is.

What is that thought—­whither does it lead?

It may be broadly said that Japanese activities throughout the Far East are based on a thorough and adequate appreciation of the fact that apart from the winning of the hegemony of China, there is the far more difficult and knotty problem of overshadowing and ultimately dislodging the huge network of foreign interests—­particularly British interests—­which seventy-five years of Treaty intercourse have entwined about the country.  These interests, growing out of the seed planted in the early Canton Factory days, had their origin in the termination by the act of the British Government of the trading monopoly enjoyed until the thirties of last century by the East India Company.  Left without proper definition until the Treaty of Nanking in 1842 had formally won the principle of trading-rights at five open ports, and thus established a first basis of agreement between England and China (to which all the trading powers hastened to subscribe), these interests expanded in a half-hearted way until 1860, when in order to terminate friction, the principle of extraterritoriality was boldly borrowed from the Turkish Capitulations, and made the rock on which the entire fabric of international