19.—It is, however, the cotton trade of Lancashire which is likely to feel a serious change ere long in its relations with Japan. Her Majesty's commercial representatives have given warning of it for some time, and shown not only the danger to be apprehended by English operatives from the competition and cheap labour of India, but also from the establishment of cotton spinning factories in Japan, and the growing preference for the home made article.

In 1885 there were only 62,000 Japanese spindles at work. Now there are over 313,000 in 35 mills. Some have not done well owing to defective management. But others are working day and night. The importation of raw cotton has quadrupled in the last three years, while that of cotton on the seeds has doubled. A million dollars worth of the most improved British spinning machinery was laid down last year, and much attention is being given to the cultivation of the cotton plant, although, owing to the typhoons, with indifferent success.

While British cotton velvets, satins, and handkerchiefs have not lost ground, and grey shirtings, T cloths, and Italian cloths came almost entirely from England, as also turkey reds and victoria lawns, the work of the Japanese mills is evidenced by a decline in the importation of cotton yarns by over three million dollars since 1888, of which two million fell on Great Britain, and a diminution in the purchase of foreign cotton drills by two-thirds. In shawls also there has been a shrinkage.

A Fresh Market for Lancashire.

It is clear, therefore, that Manchester will have before long to a great extent to replace her Japanese market, of which she had, until lately, a monopoly. This may probably be done most advantageously and effectively in the direction of United Empire trade.

Proposed Increase of Japanese Tariff.

20.—Closely allied with this question is the almost certain increase in a year or two of the Japanese tariff. The amount collected at the present time by the Customs Bureau (whose returns are compiled with much care and despatch) comes to about 5 per cent. ad valorem (60 cents per 100 catties or 133⅓lbs. of steel, and 30 cents per 100 catties of manufactured iron in rods, bars, etc., and 15 cents per 100 catties of pig), and yielded last year 4,488,384 dollars, or nearly double the customs revenue of 1881.

It is highly probable that this rate will be doubled, or even increased to 11 or 12 per cent. in accordance with the demand of national manufacturers and operatives.

Powerlessness of Her Majesty's Government. Partiality of the Japanese for the English.

21.—Under present fiscal conditions in the United Kingdom Her Majesty's Government is powerless to negotiate for a special arrangement as regards England. Were we differently situated it is not impossible that the Emperor's Government might be willing to treat preferentially with Great Britain, not only by reason of the preponderance of British interests in Japan and Japanese waters, but also on account of the popular partiality throughout the empire for our countrymen and their productions. This is evidenced in a thousand ways in the national life of this most attractive people, and not least of all by the adoption of English as the secondary official and commercial language, to an extent so great as to render it ample for travel in all but the remote districts.