To return to the Russo-Japanese negotiations. Thus far notes and replies, exchanged three times within a period of five months, must have made the position of each negotiating Power perfectly clear to the other. No further discussion could possibly bring the two Governments nearer to a reconciliation of wishes so diametrically opposed. In the mean time, the Japanese people were suffering from enormous economic losses. A large part of their raw materials had ceased to come, the shipping and trade with Korea and Northern China had declined, the fishing industry had been paralyzed, and, contrary to the tendency at normal times, the banks had been embarrassed with an over-abundance of funds.[[656]] On the other hand, Russia, while circulating the optimistic views of her Emperor and Foreign Minister, had continued her sharp diplomacy at Seul and Peking, and pushed on land and sea her vast warlike preparations in the East.[[657]]

Even then the Japanese Government would not terminate its negotiations with Russia, for it was well aware that upon the conduct of these negotiations the peace of the East depended. If the principles proposed by Japan were not accepted, the integrity of China would be threatened, and the independence of Korea, as well as the vital interest of Japan, would be profoundly endangered; thus the entire future of the Far East would be plunged into unknown perils. Under these circumstances, it seemed that Japan owed to the world as much of patience, as she owed to herself of determination. The situation was gravely discussed by the statesmen on the 11th, and before the Throne again on the 12th.[[658]] On the next day, January 13, now for the fourth time, and against the wishes of the majority of the people, the Government of Tokio reminded Russia of the serious position in which the two Powers found themselves, and begged her to reconsider the situation. Observe the following telegram of the same date from Baron Komura to Mr. Kurino:—

“You are instructed to deliver to Count Lamsdorff the following note verbale in order to confirm to him the views I have communicated to Baron Rosen on the 13th January:—

“‘The Imperial Government, with a view to arriving at a pacific solution of the pending questions, and to firmly establishing for all time the basis of good relations between the two Powers, as well as to protect the rights and interests of Japan, have, from this point of view, given most careful and serious consideration to the reply of the Russian Government which was delivered by his Excellency Baron Rosen on the 26th instant. They have finally come to the conclusion that the following modifications are necessary, i. e.:—

“1. ‘Suppression of the first clause of Article 5 of the Russian counter-proposals (presented to the Japanese Government through Baron Rosen on December 11), that is to say, not to use any part of Korean territory for strategical purposes.

“2. ‘Suppression of the whole Article (6) concerning establishment of a neutral zone.

“3. ‘The Russian proposal concerning Manchuria to be agreed to with the following modifications:—

“a. ‘Recognition by Japan of Manchuria and its littoral as being outside her sphere of interest, and an engagement on the part of Russia to respect the territorial integrity of China in Manchuria.

“b. ‘Russia, within the limits of Manchuria, will not impede Japan nor other Powers in the enjoyment of rights and privileges acquired by them under the existing treaties with China.

“c. ‘Recognition by Russia of Korea and its littoral as being outside her sphere of interest.