The Times of Thursday contained a very interesting estimate by
its military correspondent of the financial position of the two combatants in the Far East. Such estimates are, of course, mainly guesswork in their details, but the broad features are probably correct. Japan is believed to be spending about £3,000,000 per month on the military operations ; but, as her National Debt is small, her other expenditure far below receipts, and her trade increasing even during the war, her position is an excellent one. Though she had to pay highly for her first loan, her recent successes will probably enable her to borrow any further sums more cheaply Russia's war expenditure is estimated to4; be nearly three. times as great, and vast as is her latent wealth, her finances are in a far from sound condition at present. Hitherto she has been living on the loan raised last May in France, but an Imperial Ukase has just authorised the issue of new Rents bonds to the amount of 215,000,000, and she hopes, it is said, to raise a large loan shortly in Germany. Her policy is to get all she can from foreign loans before she has recourse to a note issue unbacked by gold or to fresh taxation. New taxation, indeed, would probably give her little, as the taxable margin in Russian economics is small, and she is naturally loth to do anything to interfere with her gold reserve, which is the basis of her credit. But the foreign investor, in spite of every ingenious diplomatic trick, will be
shy of lending money, in the face of an unsuccessful campaign and a large antecedent Debt, except at a high interest. If the war continues, she must be driven to note issues, and this, in the last resort, will mean the downfall of the traditional principles of her finance.
