of which a perpetual lease to the British Government had been negotiated by Lord Curzon in 1902, the reply of March, 1925, by Lord Reading refused to "reopen matters already settled." In September, 1925, His Exalted Highness challenged the application of the doctrine of res judicata, and affirmed that the two Governments "stand on the same plane." This was answered by an important State Paper of March 27, 1926, signed by Lord Reading, which stated that "no Ruler of an Indian State can justifiably claim to negotiate with the British Government on an equal footing." In September the death occurred of Lieut.General His Highness Sir Pratap Singh, G.C.S.I., G.C.I.E., G.B.E., Maharaja of Jamnu and Kashmir, at the age of 76. He was succeeded by Colonel Sir Hari Singh, K.C.I.E. Another outstanding figure of the frontier passed away in the case of Maharaja Sir Ugyen Wangchuck, G.C.S.I., K.C.I.E., Ruler of Bhutan, who also died in September at the age of 65.

India had special international relationships during the year. At the Imperial Conference which sat in London in the autumn the representatives were the Secretary of State for India, the Maharajadhiraj Bahadur of Burdwan (the leading Hindu nobleman of Bengal) and Mr. D. T. (now Sir David) Chadwick, of the Indian Civil Service. India was represented at the Seventh Assembly of the League of Nations in Geneva and on the Empire Parliamentary Delegation in Australia. In April the Union Government of South Africa agreed to a Round Table Conference on the subject of the status of the Indian population in South Africa ; and a formula was settled as a basis of the Conference. A deputation of seven members of the South African Parliament, headed by Mr. Beyers, Minister for Mines, visited India in September, and had an excellent reception. In December the Round Table Conference began in Cape Town: the representatives from India were headed by Sir Muhammed Habibullah, with two other Indians and three Europeans as colleagues. As regards the reopening of Indian emigration to British Guiana, the Legislative Assembly accepted, in 1926, after two years' negotiations, the terms originally offered by representatives of the Colony who visited India

in 1924.

In the field of finance, the fiscal year, 1925-26, closed with a surplus of 1.30 crores for the Central Government, the receipts being 131.35 crores, and the expenditure 130-05 crores. In the 1926-27 estimates, there was an expected surplus of 3.05 crores. No fresh taxation was imposed: the cotton excise duty was abolished, which meant the loss of 71 lakhs; and a further relief was given to the Provinces in a reduction to the extent of 125 lakhs in their contributions to the Central Government, which were fixed at 545 lakhs. The Indian Taxation Inquiry Committee, appointed in May, 1924, under the chairmanship of Sir Charles Todhunter, presented their report in March, 1926. The guiding

principle in the recommendations was to cheapen the necessities of life by transferring the burden of taxation to luxuries. Another report presented during the year in connexion with finance was the very important one of the Royal Commission on Indian Currency and Finance, under the chairmanship of Mr. Hilton Young, M.P., with nine colleagues, four being Indians. The main proposals of the report published in August were: (1) the stabilisation forthwith of the rupee at 1s. 6d. gold, i.e., at 8.47 grains gold ; (2) the stability in terms of gold to be secured by making the currency note and the silver rupee directly convertible into gold, but without gold circulating as money; and (3) the constitution of a Reserve Bank, to have the sole right of note issue. Sir Purshotamdas Thakurdas was the one dissentient in favour of stabilisation at 1s. 4d. to the rupee, i.e., at 7.53 grains of gold. In August the consideration of the Currency Bill was postponed by the Government to meet the wishes of the Assembly; but the Finance Member said that Government must, and would, maintain the 1s. 6d. rate, pending effective discussion in the Legislature. In November the Government of India and the Secretary of State accepted the Commission's recommendations as a whole.

The economic position of India during the year was assisted by a favourable monsoon though there were heavy floods in Burma, Bengal, and the Central Provinces. Sir Basil Blackett, in his Budget speech in March, said that the League of Nations' comparison on a gold basis showed that, while in 1913 India was eighth on the list of countries in the matter of the total value of the foreign trade, she had since risen to the fifth place. The Report for 1925-26 of the India Store Department, issued by the High Commissioner for India in November, 1926, showed the present policy of the Government of India to be (a) the encouragement of competition; and (b) the limitation of the sending of indents to London in order to encourage the building of indigenous industries. In 1926 the export of cotton suffered on account of the disorganisation caused by the large cotton crop in the United States of America. Tea did well: also coal; though jute had its troubles with a record jute crop of nearly eleven million bales. In connexion with opium, the Government of India made two important pronouncements: after an agreement had been made. with the Government of French Indo-China, public auctions in Calcutta were discontinued from April, 1926; and from that date no opium could be exported to the Far East except under a direct sale agreement with the Government of the importing country. In June, 1926, the decision was made to reduce progressively exports of opium from India except for strictly medical and scientific purposes, so as to extinguish them altogether within a period of ten years. The policy will result in the disappearance of two crores of rupees in revenue. In connexion with the Bombay Back Bay Reclamation Scheme, after previous local inquiries, the

Government of India appointed in August, 1926, a Committee of Enquiry, with Sir Grimwood Mears as chairman. In September an interim report was issued recommending the reclamation of three of the eight blocks. The Committee sat both in India and London.

Under the head of Transport and Communications, there was the acquisition by the State of the Delhi-Umballa-Kalka Railway, at a cost of four crores of rupees. In February the first electric railway in India was opened in the harbour branch, Bombay to Kurla, 10 miles, of the Great Indian Peninsula Railway. In October the broad gauge was extended to the foot of the Himalayas at Siliguri, marking the completion of 11 years' work on conversion from the metre gauge; and in December by the opening of a new feeder line of 50 miles, Sialkot was put in direct communication with the capital of the Punjab. Transport by air was the subject of a comprehensive examination in a memorandum of the Air Board published in December, 1926. It emphasised that the time had come for the Government of India to accept responsibility for subsidising commercial air services subject to conditions regarding Indian capital and employment, and the training of Indian pilots and other personnel. As regards sea transport, progress was made in developing the ports of Vizagapatam, Cochin, and Chittagong; and steady progress was made in the great King George's Dock at Calcutta, with a labour staff of 12,000 men. The Government of India decided to open a training ship at Karachi in 1927, so as to meet the desire of Indians to take a larger share in their transport systems.

As agriculturists form about three-quarters of the population of India it was appropriate that the announcement in April, 1926, of the Royal Commission on Agriculture should coincide with the arrival as Viceroy of a statesman who had made a special study of agriculture. The chairman is the Marquess of Linlithgow; and of his nine colleagues, five are Indians. The reference was generally to examine and report on the conditions of agricultural and rural economy in British India and to make recommendations. In February the Government of India decided to develop the Dehra Dun Forest Research Institute as a centre of instruction in tropical forestry second to none; and in August the first examination of Indian candidates under the scheme was held. Cognate with agriculture is the subject of irrigation. In April in the first completed unit of the Sutlej Valley irrigation scheme the Suleimanke Canal headworks were opened by the Governor of the Punjab. All the units are to be completed by 1933.

This review should not close without a reference to the measures taken for the emancipation of slaves. By March, 1926, through the exertions of Mr. Barnard, of the Burma Frontier Service, nearly 3,500 slaves of the Hukawng Valley in Burma gained their free

dom at a cost to Government of Rs. 200,000 (15,000l.). A similar expedition started under the same officer towards the end of the year for the triangle between the two sources of the Irrawaddy River in the North-East of Burma, in order to persuade the Kachin tribal chiefs to abolish the local system of slavery. Finally, the Khan of the Kalat State in Baluchistan in November, 1926, abolished private property in slaves in his territory. These measures coincided with the liberation, in Nepal, of a slave population of 60,000.

CHAPTER VIII.

THE FAR EAST: CHINA-JAPAN-THE DUTCH EAST INDIES.

CHINA.

IN the course of 1926 the balance of power between the various contending factions among which China was partitioned underwent considerable modification, chiefly owing to the phenomenal successes of the Southern Nationalist Party in the latter half of the year. At the opening of the year the distribution of the various governing powers was as follows: Chang Tso-lin held Manchuria, and also exercised a suzerainty over Shantung, which was, however, actually ruled by Chang Chung-Chang. Wu Pei-fu was in possession of the central provinces of Hupeh and Honan, including the city of Hankow, and Sun Chuan-fang of the five provinces stretching east and south-east of Shanghai-Kiangsu, Chekiang, Fukien, Anwhei, and Kiangsi. Feng Yu-hsiang, the Christian General, who had identified himself with the northern Nationalist Party, was in control of Chihli, including the cities of Tientsin and Peking. The southern provinces of Kwangtung, Kwangsi, and Kweichow were under the southern Nationalist Government, which had its headquarters at Canton. The western provinces were each under its own virtually independent Governor, though one of these, Yen Hsi-hsan, had to contest with Feng Yu-hsiang the mastery of Shansi. At Peking there was a constitutional Government which claimed to represent the whole of China, but which possessed only nominal authority, with Tuan Chi-jui as Chief Executive.

Fighting took place in January between the forces of Feng Yu-hsiang and those of Chang Tso-lin, and the latter suffered a serious reverse on January 19 at the battle of Shanhaikwan. This success, however, availed the "Christian General" little, as Wu Pei-fu now took the field against him, co-operating with his old enemy, Chang Tso-lin, with the object of recapturing Peking from the Kuomintang, or Nationalist Party. The Kuomintang troops managed to delay Wu's forces in Honan for more than a month, but early in March they were threatened with an attack

from the rear by the forces of General Li Chin-lin, who was marching up from Shantung to Tientsin, and to save themselves from being cut off they were forced to retire on that city. At the same time, Chang Tso-lin sent forces under the command of his son, Chang Hsueh-liang, from the Manchurian border southwards towards Peking; and on March 17 Manchurian warships intercepted a Russian steamer from Vladivostock which was carrying large quantities of rifles and ammunition for the Kuominchun (Nationalist army). In consequence of this blow the latter, on March 22, retired from Tientsin and devoted themselves to the defence of Peking, which the allied forces of Wu, Chang, and Li had so far unaccountably failed to occupy. Here they maintained themselves for another three weeks, in the course of which there was a good deal of firing, and Manchurian aeroplanes dropped bombs on the town. After making an unsuccessful attempt to detach Wu from his allies, the Kuominchun finally evacuated Peking between April 15 and 19, retiring to their base at Kalgan to the north-west, on the Manchurian frontier.

Peking was occupied by Manchurian troops under Chang Hsueh-liang, while a nominee of Wu was made Garrison Commander. Tuan Chi-jui, on April 20, left Peking for Tientsin, handing over his functions to the rest of the Cabinet as a Regency.

Although relations were by no means friendly between Marshals Wu and Chang, they yet agreed on the appointment, on May 13, of Dr. W. W. Yen as Premier; but as he was not persona grata with Chang, he resigned on June 22 in favour of Admiral Tu Hsi-kui. The Peking Government, however, remained nothing but a shadow, though it still occasionally addressed foreign countries in the name of China.

Rivals and enemies as they were, Marshals Wu and Chang regarded the Kuominchun, which was still unbroken and threatening Peking, as their common foe, and were anxious to cooperate for its overthrow. At a Conference on June 28 they agreed on plans for a renewed joint attack on a big scale. They had to devote the next few weeks to quelling insubordination and mutiny in their own ranks, but at length, early in August, they launched their attack, which proved entirely successful. On August 14 the Nationalists, after a very heavy artillery bombardment, were driven out of the Nankow Pass, and three days later the allied forces, under Chang Hsueh-liang and Ch'u Yu-p'u, the Military Governor of Chihli, occupied Kalgan. The Kuominchun, however, retired in perfect order and with all their supplies, and were able to establish themselves farther west, at P'ing-ti Ch'üan. They were driven from here also in October by Yen Hsi-shan, the Military Governor of Shansi, and removed their headquarters to Paotu, across the Mongolian border. Here they were joined by Feng Yu-hsiang, who had just returned from Moscow. From this centre they continued the war against Wu Pei-fu, in co