The second volume of the Iwakura Reports is the writing on Britain. What is interesting, here, is the fact that the mission had visited the large factories in the major industrial cities. The editor of the reports in particular recorded the productive processes of goods at many factories, and wrote his own impressions of the landscapes of those cities. Those records let us know the real situation of the British economy at the time. Japanese historians admit that the activities of the Iwakura mission largely contributed to Japan's modernization. But there are few studies that analyzed the second volume of the reports which had mainly described modern factories and industrial cities. The purpose of this paper is to summarize the records of the reports on the British industry, and to examine what they recognized from the industrial civilization. The Iwakura Reports would furnish important information to the notables that had initiated the early industrialization in Japan. After the mission's visit, some British companies' export to Japan increased rapidly. What is more important, however, is that the British economy was losing its own vitality in the late Victorian age in which Japan began to be rapidly industrialized. During the Japanese industrialization, some Japanese diplomats and factory-owners might have realized the decline of the British industry. Britain began to be overtaken by her rival countries such as the United States and Germany. The Iwakura Reports do not let us know the change of the British manufacture in the late nineteenth century. Later, the leading figures of Japan's industrialization might focus on the rise of Germany or America. As the Iwakura mission had visited Britain in the early stage of the competition between Britain and other rival states, they could not know the real situation of the British economy. Furthermore, with compiling his manuscripts, the editor of the reports could not help being based upon the factory-owners' explanations and their brochures. This is the reason why he focused only on the excellence and competitiveness of British manufacture.