The Japanese Government, before deciding upon hostilities against China, had been greatly concerned with the elucidation of the views and intentions of the Russian Government. The Japanese Government, realizing the hopelessness of their endeavours to reach an agreement with the Russians, decided at last to take the risk of military operations against China on the continent without having provided for the security of their flank by an understanding with Russia. The chapter reverts to the time when Prince Lobanoff was appointed Minister of Foreign Affairs, and found himself confronted with the situation created by the result of the war between China and Japan. In order to provide funds for the payment, the Russian Government undertook to place on the Paris market a Chinese Government loan with a Russian guarantee of four per cent, interest. The chapter examines relations with Japan and of the whole field of our Far Eastern policy.