In the meantime the imperial mandate to organize a new cabinet lingered between Marquis Saionji, Count Inouye, and Viscount Katsura, until Katsura succeeded, a month after the fall of the last cabinet, in forming its successor. It consisted of younger men of that school of statesmen whose sympathy was with the Elders and peers, who, like their typical field marshal, Yamagata, were known to be skeptical of the wisdom of the party government. Hardly a more singular spectacle can be imagined than the one afforded by this new cabinet, which was at once as little respected from outside as internally it was united and tactful, and which was as securely supported by the peers as its relation to the representatives was precarious. The latter, particularly Marquis Itō's followers, could not have loved the successor who seemed to have stolen into the post vacated by their leader, whose untimely downfall from the cabinet had embittered them. Nor could the feeling be suppressed that, emerging from the house of peers, the new cabinet now had the use of the very twenty-one millions of increased taxes to which its members were so recently and so stubbornly opposed.
Again it was through the financial question that the struggle opened between the government and the diet. The accounts of the fiscal year 1901 showed a deficit of 44 millions, and the proposed war loan of 50 millions to be floated in the United States failing at the eleventh hour, the difficulty was tided over by ingenious manipulations. In the budget for the next year, however, it was proposed to transfer from the "extraordinary" to the "ordinary" class of accounts the works to be defrayed by public bonds, representing 18 millions, as well as the net income to the government from the Chinese indemnity, amounting to 38 millions. The Associationists opposed this budget on rather unimportant grounds, but, at Itō's advice, consented to its passage with the pledge of the cabinet to reorganize the official system of the government with a view to eliminating spurious posts and retrenching administrative expenditures. The marquis had, however, started, on September 18, on his tour round the world, leaving an advice to his party that a friendly neutrality should characterize its attitude toward the cabinet. He attended the bicentennial celebration of Yale University, where he was honored with the degree of Doctor of Laws. Thence he sailed to Europe, receiving warm greetings from the governments of the countries through which he passed. Shortly before he returned home on February 25, 1902, however, an event took place which for the time being arrested the attention of the whole world—the Anglo-Japanese alliance, agreed on January 30 and published February 11.
The full contents and import of the agreement of this alliance will be discussed later in connection with the diplomatic history of Japan. In short, it declared unequivocally that the two governments were for peace and order and against territorial aggressions in China and Korea; and that, if one of them should be compelled to go to war with a third power in order to protect its now vested interests in those countries against the threatening conduct of the enemy, the other party would be neutral and make efforts to prevent other powers from joining in hostilities against its ally; but that if any other power or powers should join in war against the ally, then the other party should come to its assistance, and conduct the war in common. It may well be imagined with what enthusiasm the news was received by both friends and foes of the cabinet in the two houses of the diet, as it was there for the first time made known to the world on February 11, when even the peers broke their usual decorum and applauded. Nothing could have strengthened the position of the Katsura cabinet more than this successful culmination of a series of negotiations carried on in absolute secrecy with a great power whose policy of "splendid isolation" had seemed to be traditional. It would be only fair to say, however, that but for the international fame which Japan had won for herself in the Chinese war of 1894-1895 and latterly in the North China campaign of 1900, coupled with the tact and influence of Viscount Aoki and Mr. Katō, former Japanese ministers at London, even the increased common interests of the two powers in the East and the combined effort of Baron Komura, the foreign minister, and Viscount Hayashi and Sir Claude MacDonald, the respective representatives of the two governments at London and Tōkyō, would not perhaps have been sufficient to bring about the consummation of the great diplomatic enterprise. It was even suspected in some quarters that Germany also may have been instrumental in promoting the new alliance, as her well-known policy of setting England and Russia against each other for her own benefit would be best served in the Far East by wedding England to the inveterate object of Russia's jealousy. A more interesting question for us here regards the position in this affair of Marquis Itō, who had recently held conferences with the Russian foreign minister, Count Lamsdorf, at St. Petersburg, and had just been honored by Edward VII. of England with a Grand Cross of Bath. Whether the former fact indicated his preference for a Russian entente, or whether the latter was a conclusive evidence of an eminent service he had rendered toward the successful conclusion of the British agreement, has been a matter of much speculation. There exists authoritative evidence to show as conclusively that his negotiations with Lamsdorf had been carried out with the full knowledge of the Katsura cabinet, as to prove that, on the other hand, the latter's pourparlers with the British government were also continually intimated to the marquis during his tour. Probably his negotiations at St. Petersburg were less successful, while the cabinet's agreement with Great Britain was more readily concluded than he had expected. Immediately after his return to Japan the tactful statesman somewhat checked political gossip by intimating his agreement with the cabinet in its British policy.
The formation of the alliance must have had some bearing on the success of the Japanese government in floating the fifty million yen ($25,000,000) public bonds at London in the autumn of 1902, which had been rejected a year before from the financial market of New York. The income of this foreign loan was not devoted to new public works, but employed to refill the deficiencies of the old accounts.
Aside from these successes, the path of the Katsura cabinet was thorny. It could count upon no partisan support in the lower house, nor could its personnel and prestige command high respect. Its main strength lay in its remarkable unity, silence, tact, and apparent fairness. The last quality was manifested anew in its impartial attitude during the general election for the seventeenth diet. The previous diet was the first in its history that had served its full term of four years without dissolution, and the present election saw the first operation of the new election law. Of the 376 elected representatives, the Constitutional Political Association returned the absolute majority of 192, while the Progressives numbered about 80. The house contained entirely new members to the number of 227, but aside from this one fact, no particular faction had made any appreciable gain or loss, so that the status quo of all the parties was in fact maintained. Once convened, however, the conduct of the house demonstrated how precarious therein was the condition of the cabinet. The opposition of the house would probably not have been so precipitate had not the interest dear to eight-tenths of the representatives been directly assailed by the government's proposition to retain the increased rate of the land tax, which, as will be remembered, had been intended to return in 1904 from 3.3 to 2.5 per cent.
Inasmuch as this proposition had arisen from the second post-bellum measure of naval extension, it becomes necessary to say a few words concerning the status of the Japanese navy. The first programme as planned by the second Itō cabinet in 1895, and agreed to by the diet, contemplated an increase of Japan's naval force, in ten years, from 33 war vessels and 26 torpedo boats, aggregating the 63,000 tons' displacement of the fleet before the China war, to 67 vessels, besides 11 torpedo-boat destroyers and 115 torpedo boats, with a total displacement of 258,000 tons, at the end of 1905. Of this tonnage at the end of 1902 there was 252,180 tons, representing 72 vessels of all kinds. Formidable as these figures would seem, it had long been plain to the statesmen of the empire that deductions must be made for vessels built more than twenty years before and for others whose terms of usefulness must shortly expire one after another. Even if the present force were maintained, each of the six great naval powers of the world,—Great Britain, France, Russia, the United States, Germany, and Italy,—would have completely outrun Japan by the end of 1908; while the Japanese, after deducting vessels older than twenty years, would hardly possess more than 145,000 tons. Japan's naval ambition was animated, not so much by an inordinate elation as a civilized power as by the necessity of maintaining her position in East Asia and guaranteeing her own independence. When these matters are considered, the new programme of naval expansion, as at last set forth by the Katsura cabinet, rather surprises one with its modesty. It, in short, contemplated the construction, in the course of eleven years, of three battleships each of 15,000 tons' displacement, three armored cruisers each of 10,000 tons, and two second-class cruisers each of 5000 tons, totaling 85,000 tons' displacement, besides fifteen torpedo-boat destroyers and fifty torpedo boats. No one could have seriously opposed this programme had it not been for its financial side. The source of the estimated annual outlay of 11.5 million yen which the proposed plan entailed upon the government could, according to its opinion, be found nowhere but in the retention of the increased rate of the land tax, augmented by other slight items of revenue. To the seventy or eighty per cent., however, of the members of the lower house, who had pledged their word to their constituencies to restore by all means the old rate of the tax, it was no argument to say that the landowners had been inequitably lightly taxed by the side of the urban population, nor to prove the impossibility of raising the necessary expenditure by any other safe means than the retention of the increased rate. Into their hands no sharper weapon against the government could have fallen than the one which the helpless cabinet gratuitously furnished them under the pressure of an apparent necessity. Upon this juncture, what was the attitude of Marquis Itō and his party, which controlled an absolute majority in the lower house?
To answer this question is again to describe another turning point in the remarkable career of this statesman. It was made known early in the season, and no partisan view could well refute, that the marquis was in sympathy with the cabinet so far as its naval programme was concerned, which he was reported to have deemed even too moderate. As regarded the land tax question, however, which he had once in the past years considered it wise to increase even to four per cent., he now, either from conviction or from policy, assumed an attitude of unusual deliberation. Nothing could have been more disastrous to the cabinet, and more decisive for the termination of his career as a party leader, than his studied reticence about this important problem. The "whips" of his party deliberately overrode him, and ordered its long expectant local branches, soon after the general election, to forward to the headquarters resolutions against both the naval extension and the retention of the increased land tax. Resolutions accordingly poured in thick and fast. At the same time, the marquis was flooded with personal appeals to him to come out squarely against the unpopular government. It is plain that the action of his subordinates was calculated to intimidate him more than the cabinet. His authority as the president of the Constitutional Political Association had been ignored, and he yielded, perhaps in order to save others' and his own dignity. Shortly before the opening of the diet, on November 26, the marquis, after a deliberation lasting four weeks, conveyed to Premier Katsura his opinion, reiterating that the naval expansion was necessary, that the burden of the increased land tax was not particularly onerous, but that he did not think it politic at present to prolong the term of the increase, and, finally, that the naval expenditure might be met by postponing or suspending some of the less urgent public works. After further conferences, the premier, on December 3, personally assured the marquis of his sense of gratitude for his counsel, but firmly announced that, inasmuch as the budget had been sanctioned by his majesty, and as it would be unwise for the cabinet to resign on the eve of the meeting of the diet, it remained for him to make an effort to carry through his proposed plan. After this friendly ultimatum was pronounced the outcome of the measure could hardly be doubted, for the presence of the common enemy speedily brought about a temporary alliance of the Associationists and the Progressives. The irresistible coalition found its first opportunity to assail the cabinet when the latter made an imprudent but sincere move to connect three things—the budget, the navy bill, and the land tax measure—declaring the absolute necessity of upholding them together and the impossibility of an alternative course of action. The allied parties in the lower house found herein a justification for modifying Marquis Itō's suggestion to carefully study the budget with a view to discovering adequate means to balance the naval expenditure without resorting to the increased land tax. The committee on finance straightway negatived the land tax bill, and in the afternoon of the same day, December 16, when it came before the house, the chair read an imperial mandate suspending the diet for five days. This was followed by another suspension, and during this interval Prince Konoye, president of the peers, and Baron Kodama, military governor of Formosa, sought in vain to effect a compromise between the truculent lower house and the cabinet. The latter, however, having expressed willingness to make reasonable concessions, two representatives of each of the opposition parties met the premier and the ministers of finance and navy, on December 25, to discuss the compromise measure proposed by the latter. This compromise reduced the tax rate to three per cent. and agreed to make up the balance by postponing some public works and retrenching general administrative expenses. When this new plan was submitted to the parties at large, the latter roundly rejected it, Count Ōkuma, the Progressive leader, going so far as to intimate that his party was fundamentally opposed to the cabinet, which it considered unconstitutional. Under these circumstances it was no longer possible for the government to coöperate with the house, which was accordingly dissolved on December 28.
When the year 1903 dawned upon Japan it found her political conditions extremely unstable. The alliance of the Associationists and Progressives seemed unnatural, and the discipline of Marquis Itō over the former appeared no longer tenable. The coalition had been based on no positive political principle, nor could the bulk of the Association be successfully controlled by one, however personally respected, whose double capacity as trusted Elder Statesman and an opposition leader was ever liable to lead him into positions highly repugnant to those who preferred an open and relentless warfare with the cabinet. The two parties had already parted hands when the eighteenth diet was convened for an extra session in May. As to the impossible situation of Marquis Itō, to which reference has just been made, it was not long before it was demonstrated anew and with a decisive effect. The occasion was again in connection with the naval extension measure, the urgent character of which was freshly brought home to the thoughtful people by the partial failure of Russia to effect the second evacuation of Manchuria and her simultaneous pressure upon the Peking court and the Korean frontier. The cabinet presented to the house some supplementary estimates to the budget for the fiscal year of 1903, together with eight bills, two of which related to the navy and the new three per cent. land tax. The manifest hostility of the house again called forth on May 21 a suspension of the diet. On the 23d, at a general meeting of the Association, Marquis Itō made an earnest appeal to his party to accept the compromise measure which he, as an Elder Statesman, and under the entreaties of his non-partisan friends, had agreed with the cabinet to support. Under the terms of this agreement the government was understood to reintroduce the land tax bill for show, but to consent finally to raise the required annual naval expenditure of eleven and a half millions by a yearly flotation of public bonds for six millions, retrenchment in administrative expenses to the extent of one million, and deflection from the outlay for railroads and other works to the sum of four and a half millions. The appeal of the marquis was not accepted by his party without a powerful opposition and a great sacrifice, which we shall presently see. The painful compromise measure was further mangled when the house cut the supplementary budget estimates by five millions, covering the cost of a few important undertakings, and, in return for the passage of the naval programme, exacted from the government pledges to effect a drastic reorganization of finance and administration, and to place the railroad accounts under the "extraordinary" class of national expenditures. The climax was reached when the defeat of an address to the throne proposed by the Progressive members, censuring the cabinet, was quickly followed by the passage of a resolution of similar censure which was proposed by the Associationists themselves. It is unnecessary to say that the last act was no less a blow to Marquis Itō than to the Katsura cabinet. The latter had, moreover, to endure the displeasure of its best friends, the peers, who passed a petition to the government to desist from the highly unwise policy of resorting to a national loan, and a minority of whom even had contemplated proposing an address to the throne deprecating the same policy.
The eighteenth diet, which was prorogued on June 5, left the politics of Japan in an even more confused state than before its opening. The humiliation of the cabinet was only matched by the internal injuries which the parties had suffered for their conduct. The former, whose diplomatic duties in Korea and Manchuria were threatening to rise to a hitherto unknown degree of difficulty, had been forced by the merciless diet not only to retreat from the stand it originally took in regard to the most important problem of the nation, but also to bear the burden of the imposed responsibility of reorganizing the financial and administrative machinery on an almost impossible basis. The Progressives could scarcely conceal the inharmony of their leaders in regard to the immediate policy the party should pursue. Far more demoralized was the Association, which had been born under too favorable auspices, and possessed too absorbing a desire for power, to maintain its mental poise when it found itself as an opposition party. It had then appeared to lack the tried perseverance of the Progressives, while its irritation had been greatly intensified by the double position of Marquis Itō, who would on the one hand come to an agreement with the cabinet in his independent capacity as an Elder Statesman, and on the other maintain his disciplinarian leadership of the opposition party. Nor can it be concealed that the marquis, dignified statesman and brilliant counselor as he is, hardly possesses attributes which appeal to the hearts of the people and inspire the enthusiastic loyalty of his followers. It seemed evident that the majority of the party from the beginning respected his prestige and influence, which was considered as a political asset, more than either his constitutional ideals or his personality. Since they saw that the shortest road to power would lie in the direction of unequivocally upholding the proprietary interest of the country, nothing could have seemed more galling to some of them than a compromise which would deprive their parliamentary warfare of these essential tactics. Around this sentiment as a center there seem to have clustered various other motives for disloyalty. Some Associationists resented the autocratic rule of the president, and advocated a more republican form of party organization, and others denounced the marquis for sacrificing the dignity of the party for his position as an Elder. Desertion of several members, including the late lamented president of the lower house, Kataoka, and the present mayor of Tōkyō, Ozaki, was followed by the dissolution of a few local branches. The culmination, however, was the resignation of the president himself, which occurred on July 13. The marquis had at length yielded to the arguments of his fellow-Elders, which had long been becoming more and more solicitous, that his proper mission was rather that of a trusted councilor to the throne than one of party leadership. The Manchurian question was assuming a more serious character than before, and the resumption by the marquis of the presidency of the privy council appeared to the Elders, and perhaps also to the emperor, as the most natural course of events. The appointment was finally made on July 13, after Itō had given the matter his characteristically careful consideration. His severance from the party naturally followed, as no privy councilor might entertain partisan connections. In the leadership of the Association he was succeeded, at his own suggestion, by Marquis Saionji, his friend and also one of the most promising statesmen of the day. Thus after a wandering of nearly three years the prodigal son, with perhaps a valuable experience but scarcely an added prestige, returned to the fold of the council and the court. In accepting the post of the chief councilor, he said to the emperor that it was his desire of seeing the perfect operation of the Constitution, which he had had the honor of framing, that had induced him to descend to a political party and lead it; but that, as he was now, even before his work with the party had barely begun, graciously called by his majesty to resume the chair of the council, he convinced himself that it would be as much a contribution toward the realization of the constitutional régime to "stand near the throne and reverently answer imperial questions regarding important affairs of the state," as to "move among the people as a party leader." No student of the Japanese politics of to-day can fail to observe the large place Marquis Itō occupies therein as the pilot of the state, and also his full consciousness of the fact. His apparent failure as a partisan seems to have brought him back to his normal position. It will soon be seen that he returned thither in an opportune season. Her foreign affairs were just drifting Japan toward an ocean of unknown difficulties.
In the meanwhile, Premier Katsura had tendered his resignation on the just plea that an adequate conduct of the government was incompatible with the slender means in which the diet had left the exchequer. Neither this argument nor the somewhat reduced physical condition of the viscount would, however, induce the throne to relinquish its confidence in him. Thereupon the premier reminded the emperor, and it was agreed to by his majesty, that his retention of the portfolio could mean nothing else than a drastic retrenchment of the administrative and financial expenditures of the state. This colossal task the cabinet set about with characteristically quiet determination.