This shows—

(a) That the difference between the estimated and actual receipts amounted in 1898 and 1899 to more than £20,000,000 per annum.

(b) That in eight years out of twelve the actual income exceeded the estimates by £10,000,000 per annum.

(c) That the revenue was little affected by the war, and that for 1904 and 1905 the excess of income over estimates was more than £8,000,000. Had the calculations as to receipts, therefore, been more accurate, it would have been quite possible to grant to the War Ministry the supplementary sum asked for, and thus to enable our preparations to have been more complete in east and west.

In conclusion, the main reason for our military inefficiency was the inadequate funds granted by the Treasury. Funds for the War Department were stinted—

(a) Owing to the greatly increased expenditure on the fleet.

(b) Owing to the large expenditure upon the projects of the Minister of Finance in the Far East, and owing to the underestimation of revenue. But in spite of this, I think it will be allowed that from 1898–1903, during which time it distributed its money according to a strictly defined plan, the War Department attained, on the whole, remarkable results in the strengthening of our military position in the Far East. The results in this direction of the ten years preceding the Russo-Japanese War can be gauged from the following figures. We had in the Pri-Amur district, Manchuria, and in Kuan-tung:

In 1884…… 12battalions
In 1894…… 20„
In 1903…… 63„
In 1904……140„

SKETCH MAP OF EASTERN ASIA, SHOWING POSITION OF
THEATRE OF WAR WITH REFERENCE
TO NEIGHBOURING TERRITORIES.