# Japan: Its History, Arts, and Literature/Volume 6/Chapter 6

Chapter VI
THE HISTORY OF COMMERCE IN JAPAN (Continued)
AS bearing on the system of credit, which the reader already perceives to have been far beter developed in pre-Meiji Japan than is generally supposed by foreign observers, reference may be made to the manner of dealing with goods from the time of their leaving the hands of the producer or owner until they came into those of the consumer. The motive power of the whole machinery of distribution was credit. In the first place, the wholesale merchant either made advances to the producer or received the commodities on commission without any previous accommodation or security. He then offered them for sale by auction to middle-men (nakagai), and immediately on the completion of the sale he paid over the proceeds to the owner, less his own commission and charges. The broker, however, did not immediately pay the wholesale merchant. He merely became responsible for payment at a fixed future date, selling the goods meanwhile en bloc to the retailer, who also obtained them on credit ​until he could collect the price from the consumer. The intervals of credit varied with the nature of the goods, but the principle was unchanging. If a broker failed to observe his engagements, his name was posted in the market as a defaulter, and it became impossible for him to buy again until he had satisfied all claims against him. It is thus evident that credit was the basis of all commercial transactions in Tokugawa times.
In these matters of ordinary sale and purchase the law did not provide any special safeguards. But it did interest itself particularly to impart security to commercial paper. A claim founded on such an instrument was given the privilege of "summary action;" that is to say, it was entitled to be tried without waiting for the regular Court days, and a favourable judgment gave the creditor a right of priority in the distribution of the debtor's estate. It has been truly said that the whole process of production, manufacture, and distribution rested firmly on a basis of commercial paper.
There was no lack of official attention to the subject of weights and measures during the Yedo administration. Certain makers of weights, measures, and scales were licensed, and steps were taken to prevent fraudulent practices, officials being frequently despatched throughout the country on tours of inspection. But the old want of uniformity could never be completely corrected. No less than four units of length remained in ​vogue, and the measures of capacity and weight showed similar variety, the "catty" of tea, for example, weighing one hundred and twenty me, or one pound avoirdupois; the catty of incense, two hundred and thirty me, and the catty in general, one hundred and sixty me.
The Tokugawa rulers showed their appreciation of the value of good communications by imposing upon each feudal chief the duty of repairing roads, building bridges, and providing post-horses and ferry-boats within the limits of his fief. What has been explained in a previous chapter on this subject may be supplemented by saying that at first a "governor of roads" was appointed, but subsequently his functions fell to the Chief Censor and the Finance Magistrates. Assignments of land were made on condition that their revenues should be applied to pay the expenses incurred by post-towns in furnishing horses and messengers for the public service. The inhabitants of these towns enjoyed the privilege of being exempt from land-tax and received monetary loans occasionally from the treasury. Milestones were set up along the main thoroughfares, and to two families was entrusted the duty of organising and superintending all matters relating to land transport. These facilities were for the benefit of officials only. In the middle of the seventeenth century, however, the Osaka merchants organised a land-transport service to Yedo. They had to obtain permission for the carriers to ​assume military names and wear two swords, since any commoner travelling by the Tōkaidō exposed himself to considerable risks at the hands of the coolie class. In 1662 the tradesmen of the "Three Cities" (Kyōtō, Ōsaka, and Yedo) combined to extend the service and bring it within reach of all classes. At first letters and small parcels alone were carried, but by and by a guild of sixteen transport companies having been formed, each member depositing security to the extent of about £150, it became possible to despatch merchandise and specie. The charge for conveying gold and silver between Yedo and Ōsaka was two per cent, and that for carrying goods was twenty-eight shillings per hundred pounds, which prices were not excessive considering the distance—three hundred and sixty miles—and the difficulties of the journey. The year 1739 saw the establishment of the first quick post between Yedo and Ōsaka, the postmen being mounted and moving at a trot day and night, so that a letter reached its destination within seventy hours from the time of despatch. The charge for this rapid transit was high, however, namely, about £8. Using the ordinary postman, a letter generally took twenty-five days to travel from one city to the other, but then the cost was only two-pence.
Maritime facilities between Yedo and Ōsaka have already been spoken of. As to other regions, it appears that over-sea communication ​with the great rice-producing district of Kiushiu existed from a tolerably early date, but the equally prolific provinces in the north-east and the north-west remained without any shipping service until the time of the third Shogun (1623—1650), when some of the leading Yedo merchants were ordered to supply the deficiency. Like everything else relating to commerce, the maritime carrying trade fell entirely into the hand of guilds; a plainly beneficial arrangement in one respect, namely, that each guild or union of guilds insured the goods carried by its ships as well as the ship itself, losses being paid on the mutual principle. This fact is interesting, since it has been confidently affirmed by foreign writers that the Japanese had no conception of insurance prior to the Meiji era, whereas in truth they practised it for two centuries before that time. All vessels engaged in the business of maritime transport were registered by a "shipping association," which has been aptly called the "Lloyd's of Japan," since every detail relating to a ship was entered in the association's books, and a wooden ticket bearing its stamp was given to each registered vessel. Strict laws governed matters relating to maritime disasters. In case of wreck, the people of the vicinity were entitled to a portion of the cargo and wreckage salved by them, and there were detailed regulations with regard to jettisoning cargo, which seems to have been fraudulently practised at times.
​The laws for protecting commercial transactions against fraud were very severe. A few of the principal provisions will suffice to convey a general idea of the whole:—
A merchant who sold commodities to A, received money for them and then sold them to B or pawned them, was punishable with death if the price of the goods amounted to £16 or upwards, and with tattooing on the brow when the price fell short of that sum. But if, while lying in prison, he restored the money, capital punishment was changed into banishment from Yedo, and tattooing into expulsion from the street where he resided.
An unwitting purchaser of stolen goods was required to restore them and suffer the loss. If he had sold them, his duty was to trace them and re-purchase them from their actual holder, the principle being that responsibility rested on the person who had bought direct from the thief. If the goods could not be found, the original purchaser had to give back their money equivalent.
Any one wittingly buying stolen goods was banished from the street where he resided; and was liable to capital punishment if he had sold them.
Many rules were enacted to restrain usury. Compound interest was illegal, and the courts had no competence to entertain a creditor's suit after a bond had been frequently renewed. The latter restriction did not apply to blind creditors, however, and the results of the exception made in their favour have already been described. To fall into the clutches of a blind usurer was proverbially worse than the sharpest penury. ​Ordinary creditors, too, might make things unendurable for their debtors, by purchasing the services of "sitting duns" who planted themselves in a debtor's house immovably until he discharged his obligation; or of "aids" who resorted to threats and even physical violence in the interests of their employers. The records show that, in 1718, no fewer than 33,037 suits to recover money lent were instituted in Yedo.
In Tokugawa times the demoralising effects of the "benevolent system" which had been so frequently abused by Ashikaga Yoshimasa, were evidently understood, for the custom of periodically drawing the pen through all debts was not adopted. Once, however, at the close of the eighteenth century, the usurious practices of merchants entrusted with the duty of selling "salary rice" had culminated in such distress among the samurai that an official decree annulled all debts which had been outstanding for more than six years, and provided that, in the case of other debts, liability for interest should cease and the principal might be paid off by instalments. Another notable enactment with regard to debt was that of 1843. It provided that in the case of clearly proved obligations eighty days should be allowed for discharging a loan not exceeding £48; one hundred and twenty days for a loan not exceeding £80, and so on up to loans of from £960 to £1,600, for which the period of grace was put at six hundred and fifty days. On the ​whole, however, Tokugawa rule was marked by freedom from interference in such matters.
Under the conditions here noted the business of pawnbroking assumed large dimensions. Anything might be pawned, from a landed estate to a pair of wooden clogs, and the sign-board of a shop or the implements of a hair-dresser were taken by a pawnbroker as representing the house of their owner. The term of pawn—except in the case of land—was from three to eight months, and the legal limit of interest varied in different epochs, being two and seven-tenths per cent monthly for silver and gold and four per cent for copper, in the beginning of the eighteenth century, whereas in the beginning of the nineteenth century it was from one to two per cent, large sums paying a heavier rate than small. The operations of the pawnbroker were strictly regulated. Anyone offering an article for the first time had to write his name and address on a paper stamped with his seal, and had also to provide a reputable security, on whom devolved the duty of redeeming and restoring to its owner a stolen article which had been received by the pawnbroker in good faith. If a pawnbroker disposed of an article prior to the expiration of the term of pledge, and was unable to restore it to its owner, he had to pay to the latter twice the amount originally advanced. Other rules governed the business, but enough has been said to ​show that it was thoroughly and efficiently supervised. The pawnbrokers formed a guild like all other merchants, and received licences from the Government. In the year 1723, the records show that the Yedo guild consisted of 253 associations, comprising 2,731 persons. In 1770 the number was limited to 2,000, each of whom paid 1 s. 4 d. annually as "benefit money." Ōsaka, though its population did not exceed one-third of that of Yedo, had nearly as many pawnbrokers. At the time (1832) of the Government's crusade against the guild system, the pawnbrokers' licences were withdrawn, only to be restored ten years later when the benefits of cooperative enterprise came to be appreciated.
Itinerant merchants in Japan deserve notice. Omi and Etchiu were the provinces chiefly remarkable for such tradesmen. The pedlars of the former are said to have been originally samurai of Yawata, who, deprived of their feudal service, laid aside their swords and shouldered a pack. At all events, they showed remarkable enterprise and business capacity. They travelled even to Yezo and to the South Sea Islands; they established stores in remote regions; their thrift was such that they would pick up straw sandals discarded on the wayside and preserve them for future use, and they ultimately succeeded in rendering Omi proverbial for wealth. The pedlars of Toyama in Etchiu were a still more interesting fraternity. Their origin dated from ​1681, when a travelling physician of Bizen administered a drug of striking efficacy to Mayeda Masatoshi, feudal chief of Toyama. Mayeda ordered his vassals to learn the method of compounding this medicine, and thereafter they began to carry the "Toyama drug" from place to place, finding a ready sale for it. The method of dealing was peculiar. No one was required to pay for medicine that he had not used. The vendor deposited a certain quantity of medicine with a customer, and returning a year later, received the price of whatever portion had been used in the interval. It was a system of absolute trust, and it worked so successfully that the business grew to very large proportions. A guild was organised with subordinate confederations, and licence-fees were paid, varying from sixteen shillings in the beginning of the eighteenth century to two pounds in the middle of the nineteenth. The vendors received monetary advances and parcels of medicine on the security of their beats and of the sale made by them. In short, the method of credit received its highest development in these transactions, and it is therefore interesting to note that whereas seventeen hundred pedlars were employed in 1830, making sales that amounted to £80,000, the figures in 1848 were two thousand pedlars and £192,000, which further increased in later years.
The tea-trade of Tokugawa times also presented features of special interest. Uji, in the ​province of Yamashiro, was the chief place of production. There were three classes of producers: the On-mono-chashi (honourable-utensil tea-men), who prepared leaf for the Shōgun and the great daimyō; the Ofukuro-chashi (honourable-bag tea-men), who bad to supply the principal monasteries; and the On-tori-chashi (honorable-take tea-men), who catered for the public at large. The On-mono-chashi numbered eleven families, of whom the two principal had the rank of Shōgun's "deputies;" possessed revenues of about £500 and £300, respectively; kept the state of nobles at Uji, and served in alternate years as director of the whole of their class. All the On-mono-chashi wore samurai costume, carried a sword, and with the exception of the two principals, shaved their heads. Every year the Shōgun's tea-jars were carried to Uji to be filled. This proceeding was attended with extraordinary ceremonial. There were nine choice jars in the Shōgun's palace, all genuine specimens of Luzon pottery, and three of these were sent each year in turn, two to be filled by the two "deputy families;" the third, by the remaining nine families of On-mono-chashi. The jars were carried in solemn procession, headed by a master of the tea-cult (cha-no-yu) and a "priest of tea," and accompanied by a large party of guards and attendants. In each fief through which the procession passed it received an ostentatious welcome and was sumptuously feasted. On arrival at Uji the jars, which ​always left Yedo fifty days before midsummer, stood for a week, in a specially prepared store until every vestige of moisture had been expelled, and then, having been filled, were carried to Kyōtō and there deposited for a space of one hundred days. Meanwhile the members of the procession which had escorted the jars from Yedo returned thither, and in the autumn repaired once more to Kyōtō to fetch the tea. The return journey was by the Kiso-kaidō, and again the progress of the jars was marked by ceremonious welcomes and feastings in each district. For each jar of tea a gold ōban (sixteen pounds) was paid, and the same rate held for purchases by a daimyō. No new tea might be delivered from Uji until the Shōgun's jars had been filled, and official permission to proceed with the plucking of the first crop of leaves had to be obtained with much formality from Kyōtō. These extravagances had a political purpose, but the cost of the jars' progresses to and from Yedo being enormous, the frugal Shōgun Yoshimune (1710—1744) put an end to the picturesque custom.
Japan's foreign trade, its origin and its development during the Meiji era, are so intimately connected with the political history of the fall of the Tokugawa and the restoration of administrative power to the Emperor, that in speaking of the latter events some reference to the former could not be avoided. Hence the reader is already familiar with the manner in which commercial ​relations were re-established between Japan and the Occident in modern times, and also the embarrassments that resulted from the marked difference between the silver price of gold in Japan and its silver price in Europe at the epoch when the trade was opened. Another fact which greatly helped to render foreign commerce unpopular at first was an extraordinary appreciation of prices that followed its inauguration. The severity of the fluctuation may be seen from the following table:—
| Commodity. | Quantity. | Quantity. | Silver Price in 1830. | Silver Price in 1830. | Silver Price in 1865. | Silver Price in 1865. |
| Rice | 1 | koku | 91.00 | momme | 207.50 | momme |
| Barley | | ‘‘ | 32.50 | ‘‘ | 160.00 | ‘‘ |
| Salt | | ‘‘ | 10.31 | ‘‘ | 62.50 | ‘‘ |
| Shoyu (soy) | 1 | barrel | 24.10 | ‘‘ | 62.63 | ‘‘ |
| Rape-oil | 1 | koku | 251.00 | ‘‘ | 1220.00 | ‘‘ |
| Brown sugar | 1 | catty | 0.75 | ‘‘ | 3.175 | ‘‘ |
| Firewood | 20 | kwamme | 4.70 | ‘‘ | 22.60 | ‘‘ |
| Charcoal | 1 | bag | 4.10 | ‘‘ | 15.10 | ‘‘ |
| Mats | 10 | | 36.74 | ‘‘ | 180.00 | ‘‘ |
| Dried Banito | 10 | kwamme | 200.00 | ‘‘ | 1600.00 | ‘‘ |
| Herring fertiliser | | ‘‘ | 19.00 | ‘‘ | 110.00 | ‘‘ |
| Mushrooms | 1 | | 160.00 | ‘‘ | 800.00 | ‘‘ |
| Lacquer | 1 | kwamme | 85.00 | ‘‘ | 450.00 | ‘‘ |
| Tiles (roof) | 1000 | | 150.00 | ‘‘ | 800.00 | ‘‘ |
| Copper | 100 | catties | 320.00 | ‘‘ | 1380.00 | ‘‘ |
Two hundred per cent of this appreciation was due to change of coinage effected by the Government in order to convert the ratio between gold and silver from one-fifth, at which it stood in Japan, to one-fifteenth, the European figure. But in many cases, as the table shows, the apprecia​tion was four hundred per cent, and seldom less than three hundred per cent, and such a fluctuation caused much inconvenience to the consuming classes. Attributing it to the advent of foreigners and the opening of new markets, the people at first regarded over-sea commerce with disfavour. This objection did not long remain effective, however, for on the other side were ranged the producers who received from foreign buyers such prices as they had never before realised. Marine products, raw silk, and tea were the chief staples of export at first. It has already been shown that for several centuries Japan's over-sea trade had been under the control of the Government, to whose coffers it contributed a substantial revenue. When the foreign exporter entered the field under the conditions created by the new system, he diverted to his own pocket the handsome profits hitherto accruing to the Government, and since the latter could not easily become reconciled to this loss of revenue, or wean itself from its traditional habit of interference in affairs of foreign commerce, whereas the foreigner, on his side, not only desired secrecy in order to prevent competition, but was also tormented by inveterate suspicions of Oriental espionage, not a little friction occurred from time to time. Thus the impression suggested by the scanty records of that early era is that trade was beset with great difficulties, and that the foreigner had to contend against most adverse ​circumstances, though in truth his gains amounted to forty or fifty per cent. It happened that, just before Japan's raw silk became available for export, the production of that staple in France and Italy had been largely curtailed owing to a novel disease of the silkworm. Thus when the first bales of the Japanese article appeared in London, and it was found to possess qualities entitling it to high rank, a keen demand sprang up, so that in 1863, the fourth year after the inauguration of the trade, no less than seventeen thousand piculs were shipped. Japanese tea, also, differing radically in taste and bouquet from the black tea of China, appealed quickly to American taste, and six million pounds of it were sent across the Pacific in 1863. The corresponding figures for these two staples in 1899 were sixty thousand piculs and twenty-eight million pounds, respectively. That remarkable development is typical of the general history of Japan's foreign trade in modern times. Omitting the first decade, the statistics of which are imperfect, it is found that the volume of the trade grew from five and three-fourths millions sterling in 1868 to forty-nine millions in 1900. It was not a uniform growth, however. The period of twenty-three years divides itself conspicuously into two eras: the first of eighteen years (1868-1885), during which the growth was from five and three-fourths millions to thirteen millions, a ratio of one to ​two and one-fourth, approximately; the second of fifteen years (1885-1900), during which the growth was from thirteen millions to forty-nine millions, a ratio of nearly one to four. That a commerce which did little more than double itself in the first eighteen years should have quadrupled itself in the next fourteen, is a fact inviting explanation.
There were two principal causes: the one general, the other special. The general cause was that several years elapsed before the nation's material condition began to respond visibly to the administrative, fiscal, and transport improvements effected by the Meiji Government. Taxes had been reduced and security of life and property obtained, but political unrest did not finally disappear until 1881, when the promise of constitutional government was proclaimed; neither did railway building, road-making, harbour construction, and the development of a mercantile marine exercise a sensible influence upon the people's prosperity until 1884 or 1885. From that time the country entered upon a period of steadily growing prosperity, and from that time private enterprise may be said to have finally shaken off official restraints and started upon a career of independent activity.
The special cause which, from 1885, contributed to a marked growth of trade, was the resumption of specie payments, spoken of in a previous chapter. Up to that time the Treas​ury's fiat notes had suffered such marked fluctuations of specie value that sound or successful commerce became very difficult. Against the import merchant the currency trouble worked with double potency. Not only did the gold with which he purchased goods appreciate constantly in terms of the silver for which he sold them, but silver itself appreciated sharply and rapidly in forms of the fiat notes paid by Japanese consumers. Cursory reflection may suggest that these factors should have operated inversely to stimulate exports as much as they depressed imports. But such was not altogether the case in practice. For the exporter's transactions were always hampered by the possibility that a delay of a week or even a day might increase the purchasing power of his silver in Japanese markets by bringing about a further depreciation of paper, so that he worked timidly and hesitatingly, dividing his operations as minutely as possible in order to take advantage of the downward tendency of the fiat notes. Not till this element of pernicious disturbance was removed did the trade recover a healthy tone and grow so lustily as to tread closely on the heels of the foreign commerce of China, with her three hundred million inhabitants and long-established international relations.
In the main this trade was built up by the energy and enterprise of the foreign middleman. He acted the part of an excellent agent. As an exporter, his command of cheap capital, his ex​perience, his knowledge of foreign markets and his connections enabled him to secure prices which Japanese, working on their own account, could not possibly have obtained, and he paid to Japanese producers ready cash for their staples, taking upon his own shoulders all the risks of finding a sale for them beyond the sea. As an importer, he enjoyed credit abroad which the Japanese lacked, and he offered to Japanese consumers foreign products laid at their doors with a minimum of responsibility on their part. Further, whether as importers or as exporters, the foreign middlemen always engaged in such keen competition with each other that their Japanese clients obtained the very best possible terms from them. Yet the Japanese have always been anxious to oust them. In a measure the ambition is quite natural. If a community of aliens settled down in the United States or in England, and obtained a dominant place in the management of the country's foreign trade, Americans and Englishmen would certainly endeavour to wrest the business from their hands. Every nation must desire to carry on its own commerce independently of foreign assistance, and since a community of strangers is not to be found discharging similar functions in any Occidental land, the Japanese would prefer that their land should not be exceptional in that respect.
There are, further, some special features of the foreigners' methods in Japan which render his ​intervention irksome. His practice is openly based on the hypothesis that no Japanese is trustworthy, and he takes frequent occasion to proclaim his want of confidence in a manner that may be wholesome but is assuredly very offensive. His experience, it must be added, goes far to justify this distrust. He can show chapter and verse for saying that neither the moral sanctity of an engagement, nor the material advantage of credit, nor even the practical necessity of implementing every condition of a contract, is fully appreciated by the average Japanese tradesman with whom he has had dealings. In China there are associations of merchants whose chief object is to foster credit by a system of mutual insurance. Lest the business of the members in general should lose the benefit of public trust, a default on the part of any one of them is made good by the association en masse. In Japan also there are associations nominally formed with the same motive, but their apparent disposition in practice is to shield and abet a defaulting member, rather than to denounce him, when a foreigner is his victim. There are some considerations to be noted, however. One is that the Japanese frequenting the treaty ports and doing business with the foreign residents, belong to an inferior stratum of the nation. They established their footing at a time when all contact with foreigners was counted degrading or unpatriotic. For the most part they were men with​out reputations to imperil, and they approached the foreigner with a disposition to regard him as a person to be neither spared nor respected. In short, they were not, nor are they yet, fair representatives of the upper grade of Japanese merchants. A more subtle factor is that the wholesome atmosphere of public opinion is virtually wanting in the region of this open-port trade. Whatever chicanery a Japanese may practise against foreigners, his own version of the incident alone reaches his nationals. Opinions may differ as to the efficacy of the checks which the scrutiny of his fellows imposes upon the average mortal's improbity, but that it does impose a considerable check, none will deny. The Japanese trader, in his dealings with foreign resident merchants, is beyond the influence of such checks. If he sins, it is with the comfortable conviction that his sin will not find him out. Then, above all, there is the fact that the foreigner is generally regarded as fair game. He may preach to the Japanese about commercial morality, but the Japanese consider him arbitrary, masterful, exacting, and often unjust. His style of living also contributes to render him unwelcome. He builds for himself a mansion far more imposing than that of his native client, and his daily expenditure is such as to suggest to Japanese eyes that he derives a splendid income from his business. Thus, receiving little consideration from the people of the country in his ​transactions with them, he learns to regard them with profound distrust. But it is not possible to endorse his sweeping verdict that the commercial conscience is wholly undeveloped in Japan and that transactions on credit are impossible. History flatly contradicts such an allegation. Throughout more than two hundred years under Tokugawa rule all business was conducted on a basis of credit more extended and more thorough than could have been found in any other country at the same epoch, and commercial paper as well as private bank-notes commanded implicit confidence. There is no question of conjecture or credulity in this matter: the facts are beyond cavil. It must be conceded that the resident foreign merchant has suffered sufficiently to warrant his suspicions; but a nation with such a record as that of the Japanese is not to be written down commercially conscienceless or radically dishonest because it often walks crookedly in endeavouring to circumvent the foreigner, whose assumption of superiority it resents, whose large share in the country's over-sea trade it regards with jealousy, and whose unqualified criticisms it hears with not unnatural umbrage.
Statistics show that the efforts made by Japanese merchants to get the foreign trade into their own hands have been tolerably successful, for whereas, in 1888, their share was only twelve per cent of the total, it rose to twenty-five per cent in 1899. Yet there are strong reasons to ​doubt whether such a rate of change will be maintained in the future. The day is still distant when the Japanese tradesman can hope to establish with the Occident relations of such mutual intimacy and confidence as will enable him to take the place now occupied by the foreign middleman.
Analysis of Japan's foreign trade during the Meiji era (1868—1900 inclusive) shows that exports exceeded imports in fifteen years. This would suggest a tolerably well-balanced trade. But closer examination does not confirm the suggestion. Reckoning from 1872, when returns relating to movements of specie became available for the first time, it is found that the quantity of gold and silver which flowed out of the country exceeded the quantity flowing in by fifty-nine million yen. On the other hand, the imports of merchandise for the same time were three hundred and twenty million yen in excess of the exports. Obviously Japan cannot have paid for imports worth three hundred and twenty millions of yen by a disbursement of only fifty-nine millions of species. This apparent anomaly admits of an easy explanation. After the war of 1894—1895 Japan received from China an indemnity of thirty-six and one-third millions of pounds, out of which she brought eighteen and two-thirds millions into the country. Further, in 1898, she sold bonds to the value of four and one-third millions in the London market and caused the ​money to be sent to Tōkyō. If these twenty-three millions—or two hundred and thirty million yen—be taken into account, the excess of apparently unpaid for imports is reduced to thirty-one millions of yen, the greater part of which, if not the whole, is accounted for by the expenditures of foreigners resident in the country and of tourists visiting it. There can be no question, however, that Japan's foreign trade is at present causing an outflow of her specie. Only within the past five years (1896 to 1900), however, has the balance been seriously against her, the excess of imports for that period totalling no less than three hundred and ten million yen. Doubtless the explanation is to be sought in the fact that since 1896 the Government has been spending great sums on works connected with the post-bellum programme of armaments' expansion, and that the millions thus scattered among the people have increased their purchasing power to an abnormal extent.
It can scarcely be doubted that the future development of Japan's trade will be in the direction of manufactures. She will always be able to send abroad considerable quantities of raw silk and tea and comparatively inconsiderable quantities of marine products, copper, coal, camphor, sulphur, rice and minor staples, but, with regard to these, either her producing capacity is inelastic or her market is limited. It is ​certain, indeed, that she will by-and-by have to look abroad for supplies of the necessaries of life. Rice is the staple diet of her people, and she seems to have almost reached the potential maximum of her rice-growing area; for in spite of her genial climate and seemingly fertile soil, the extent of her arable land is disproportionately small. She has only eleven and one-half millions of acres under crops, and there is no prospect of any large extension, or of the yield's being improved by new agricultural processes.
The Japanese farmer understands his work thoroughly. By skilful use of fertilisers he has been able to raise good crops of rice on the same land during fifteen or twenty centuries. On the other hand, not only is the population increasing at the rate of half a million annually, but in proportion to the growth of general prosperity and the distribution of wealth, the lower classes of the people, who used formerly to be content with barley and millet, now regard rice as an essential article of food. It cannot be long, therefore, before large supplies of this cereal will have to be drawn from abroad. The same is true of timber, which has already become inconveniently scarce. Further, Japan cannot even grow her own cotton, and nature has not fitted her pastures for sheep, so that much of the material for her people's clothing has to be imported. Her future lies undoubtedly in industrial enterprise. She has an abundance of ​cheap labour, and her people are exceptionally gifted with intelligence, docility, manual dexterity, and artistic taste. Everything points to a great future for them as manufacturers. This is not a matter of mere conjecture. Striking practical evidence has already been furnished. Cotton-spinning may be specially referred to. As long ago as 1862, the feudal chief of Satsuma started a mill with five thousand spindles. During a whole decade he found only one imitator. In 1882, however, a year which may be regarded as the opening of Japan's industrial era, this enterprise began to attract capital, and in the course of four years fifteen mills were established, working fifty-five thousand spindles. By foreign observers this new departure was regarded with contemptuous amusement.
The Japanese were declared to be without organising capacity, incapable of sustained energy, and generally unfitted for factory work. These desponding views had soon to be radically modified, for by 1897 the number of mills had increased to sixty-three; the number of spindles to some eight hundred thousand; the capital invested to twenty-one million yen, and the average annual profit per spindle was three and one-half yen, or thirteen and one-third per cent on the capital. The rapidity of this development suggests unsoundness, but speed is a marked characteristic of Japan's modern progress. In 1880, for example, a man named Isozaki, of ​Okayama prefecture, carried to Kobe a specimen of a new kind of floor-mat, the outcome of two years' thought and trial. Briefly described, it was matting with a weft of fine green reeds and a warp of cotton yarn, having a coloured design woven into it. Isozaki found difficulty in getting any one to test the salability of his invention by sending it abroad. Sixteen years later, the "brocade-matting" industry of Okayama prefecture alone occupied 734 weaving establishments, with 9,085 stands of looms; gave employment to 9,375 artisans, of whom 5,335 were females, and turned out two and a fourth million yen worth of this pretty floor-covering. Meanwhile the total value of the industry's output throughout the Empire had reached nearly six million yen, and the quantity exported stood at four millions, approximately, in the customs returns. Here, then, is a trade which rose from nothing to a position of importance in six-teen years.
Even more remarkable in some respects has been the development of the textile industry. In 1884 the total production of silk and cotton fabrics was six million yen; in 1898 it had increased to one hundred and ten millions. The manufacture of lucifer matches is another industry of entirely recent growth.
A few years ago, Japan used to import all the matches she needed, but by 1900 she was able ​not only to supply her own wants but also to send abroad six million yen worth.
Without carrying these statistics to wearisome length it will suffice to note that, in six branches of manufacturing industry which may be said to have been called into active existence by the opening of the country,—namely, silk and cotton fabrics, cotton yarns, matches, fancy matting, and straw braid,—Japan's exports in 1888 aggregated only one-fourth million yen, whereas the corresponding figure for 1899 was sixty-eight millions. With such results on record, it is impossible to doubt that she has a great manufacturing future. The fact has, indeed, been partially recognised and much talked of within the past few years, especially in the United States, where the prospect of Japanese industrial competition was recently presented to the public in almost alarming proportions. On the other hand, among foreigners resident in Japan the general estimate of native manufacturing capacity is low. Doubtless, as is usually the case, the truth lies between the two extremes. Japanese industrial competition will be a formidable fact one of these days, but the time is still distant. Progress is checked by one manifest obstacle, defective integrity. Concerning every industry whose products have found a place in the catalogue of modern Japan's exports, the same story has to be told: just as really substantial development seemed to be visible, fraudulent adulteration or dishonestly careless ​technique interfered to destroy credit and disgust the foreign consumer. The Japanese deny that the whole responsibility for these disastrous moral laches rests with them. The treaty-port middle-man, they say, buys so thriftily that high-quality goods cannot be supplied to him. That excuse may be partially valid, but it is not exhaustive. The vital importance of establishing and maintaining the reputation of an article offered newly in markets where it has to compete with rivals of old established excellence, is not yet fully appreciated in Japan.
As to organising capacity, the possession of which by the Japanese has been strenuously doubted by more than one foreign critic, there are proofs more weighty than any theories. In the cotton-spinning industry, for example, the Japanese are brought into direct competition in their own markets with Indian mills, employing cheap native labour, organised and managed by Englishmen, and having the raw material at their doors. The victory rests with the Japanese, from which it may fairly be inferred that their organisation is not specially defective or their method costly. Yet there is one consideration that must not be lost sight of: it is the inexperience of the Japanese; their lack of standards. Japan is dressing herself in a material civilisation that was made to the measure of alien nations, and curious misfits are inevitably developed in the process. ​If the England of 1837, for example,—that is to say, England as she was at the commencement of the Victorian era,—could have been suddenly projected forward to 1897, and invited to adapt herself to the moral and material conditions of the latter period, the task, though almost inconceivably difficult, would have been easier than that which Japan set herself thirty years ago, for England would at least have possessed the preliminary training, the habit of mind, and the trend of intelligence, all of which were wanting to Japan. That essential difference should be easy to remember, yet it is constantly forgotten by observers of Japan's progress. Again and again they make the mistake of measuring her acts by the standards to which they have themselves been educated. Again and again they fall into the error of deducing from her failures and perplexities the same inferences that similar perplexities and failures would suggest in Europe or America. If the citizens of Tōkyō hesitate to spend large sums upon street repair, they are accused of blind parsimony, though the fact is that, never having had any practical knowledge of really fine roadways, they have not yet learned to appreciate them. If Japanese officials do not at once succeed in solving the very difficult problem of Formosan administration, it is concluded that they lack administrative ability, though absolute lack of experience suffices to account for their ill-success.
​If the people have not yet made any significant contribution to the sum of Occidental scientific knowledge or mechanical contrivances, they are dismissed as imitative not initiative, which is much as though a lad should be charged with want of originality because, having barely mastered the integral calculus, he did not write some new chapters on quaternions. If they have not yet reduced constitutional government to a smoothly working system, have not yet emerged from a confusion of political coteries into the orderly condition of two great parties, each capable of assuming and discharging administrative responsibilities, they are declared unfit for representative institutions, though they have tried them for only ten years after fifteen centuries of military feudalism or hereditary oligarchy. If they do not carry on their new industries with the minimum of efficient labour, and if they fail to appreciate the economical necessity of bestowing constant care upon machinery and seeking to rise above first results instead of regarding them as the ne plus ultra of subsequent achievement, they are pronounced radically deficient in the industrial instinct, whereas the truth is that they have not as yet any accurate perception of the standards experience and competition have established in foreign countries.
The condition of their army and of their navy shows that not capacity but practice is what the Japanese lack. These two services are altogether ​modern creations. There was nothing in the history of Japan to suggest her competence for managing such machines. Yet the excellence of her military organisation was fully demonstrated in her campaign against China, in 1894—1895, and again in the Peking expedition of 1900. In the former she had to undertake the most difficult task that falls to the lot of a belligerent, the task of sending over-sea two corps d'armée (aggregating a hundred and twenty thousand men), and maintaining them for several months in widely separated fields,—one in eastern and central Manchuria; the other in the Liaotung peninsula and, subsequently, in Shantung province. The effort did not appear to embarrass her. There was no sign of confusion or perplexity; no break-down of the commissariat or transport arrangements; no failure of the ambulance or hospital service. Everything worked smoothly, and the public were compelled to recognise that Japan had not only elaborated a very efficient piece of military mechanism, but had also acquired ability to employ it to the best advantage. The same inference was suggested by her navy. Although during two and a half centuries her people had been debarred by arbitrary legislation from navigating the high seas, the twenty-fifth year after the repeal of these crippling laws saw the State in possession of a squadron of thirty-three serviceable ships-of-war, officered and
Niomon Iyemitsu Temple at Nikko.
evidently possessing all the qualities of a fine fighting force. In the war with China this navy showed its capacity by destroying or capturing, without the loss of a single ship, the whole of the enemy's fleet, whereas the latter's superiority in armour and armament ought to have produced a very different issue. On the other hand, a visit to Japanese factories often shows machinery treated carelessly, employés so numerous that they impede rather than expedite business, and a general lack, of the precision, regularity and earnestness that characterise successful industrial enterprises in Europe and America. Achievement in one direction and comparative failure in another, whereas the factors making for success are similar in each, indicate, not incapacity in the latter case, but defects of standard and experience.
The vast majority of the Japanese have no adequate conception of what is meant by a highly organised industrial or commercial enterprise. They have never made the practical acquaintance of anything of the kind. For elaborating their military and naval systems, they had close access to foreign models, every detail of which could be carefully scrutinised, and they availed themselves freely of the assistance of foreign experts, French, German, and British. But in the field of manufacture and trade their inspection of foreign models is necessarily superficial, and they are ​without the cooperation of foreign experts. It may be supposed that, since the foreign middle-man plays such an important part in the country's over-sea commerce, his skill and experience must have been equally available for the purposes of industrial enterprise. But two difficulties stood in the way,—one legal, the other sentimental. The treaties forbade foreigners to hold real estate or engage in business outside the limits of the Settlements, thus rendering it impossible for them either to start factories on their own account or to enter into partnerships with native industrials; and an almost morbid anxiety to prove their independent competence impelled the Japanese to dispense permanently with the services of foreign employes. Rapid as has been the country's material progress, it might have been at once quicker and sounder had these restrictive treaties been revised a dozen years earlier, when Japan was still upon the threshold of her manufacturing career, and before repeated failures to obtain considerate treatment at the hands of Western Powers had prejudiced her against foreigners in all capacities. In 1885 she was ready to welcome the Occidental to every part of the country; regarded it as a matter of course that he should own real estate, and would gladly have become his partner in commerce or manufactures. In 1895 she had come to suspect that closer association with him might have dangers and disadvantages, and that the soil of Japan ought to be preserved from ​falling into his possession. There are clear evidences that this mood, so injurious to her own interests, is being replaced by more liberal sentiments, but in the mean while she has been induced to stand aloof from alien aids at a time when they might have profited her immensely, and to struggle without guidance towards standards of which she has as yet only a dim perception. Already, too, some of the advantages of cheap labour and inexpensive living are disappearing, and, on the whole, there seems to be little doubt that though great manufacturing successes lie before her, she will take many years to realise them.
* ↑ See Appendix, note 58.
* ↑ See Appendix, note 59.
* ↑ See Appendix, note 60.
* ↑ See Appendix, note 61.
* ↑ See Appendix, note 62.
* ↑ See Appendix, note 63.
* ↑ See Appendix, note 64.
* ↑ See Appendix, note 65.
* ↑ See Appendix, note 66.
* ↑ See Appendix, note 67.
* ↑ See Appendix, note 68.
* ↑ ​Note 58.—One-tenth of everything below water and one- ​twentieth of everything above, if at sea; the corresponding figures in the case of a river being one-twentieth and one-thirtieth, respectively.
* ↑ ​Note 59.—When cargo had been jettisoned, a full report of the facts had to be made to the officials at the first port of call, who then examined the remaining cargo and sealed it, pending delivery to its consignees. Severe penalties restrained fraudulent jettison, and when a deserted ship drifted ashore, the local officials were required to retain the hull and cargo for half a year in order to give the owner time to prefer a claim. Alienation of cargo involved heavy punishment, and for the offence of selling a vessel and her cargo under pretence of wreck, the master and officers were beheaded; the crew scourged and branded on the face. Collusion between a village headman and a ship-master to simulate unavoidable jettison of cargo which had been fraudulently sold, constituted a capital crime; the receiver of the stolen goods was also liable to decapitation, and a confederate exposed himself to transportation or expulsion from his village.
* ↑ ​Note 60.—An attempt made in 1842 to fix the maximum limit of interest at fifteen per cent, failed completely. It checked the circulation of money, and borrowers themselves sought to evade it.
* ↑ ​Note 61.—This is the figure confidently stated in a despatch addressed by the British Representative in Yedo to his Government in 1860.
* ↑ ​Note 62.—Japan's fishing industry is doubtless capable of great development. She has 17,602 miles of coast, and 270,000 families devoted to fishing, or more than fifteen families to each mile. They employ 330,706 boats and 1,194,408 nets, representing a capital of about three millions sterling, and the total value of the annual catch is put at five millions sterling, though ten millions would probably be nearer the truth. The fishermen are sturdy, courageous fellows, but their methods are primitive and virtually no improvements have yet been introduced.
* ↑ ​Note 63.—It was at one time supposed that Japan possessed great mineral wealth, but the question remains uncertain. The output of the various mines increases steadily, it is true, but its total annual value does not exceed three millions sterling. ​Recently gold has been discovered in seemingly large quantities in Hokkaido and kerosene in Echigo as well as Hokkaido. The practical value of these discoveries remains to be determined.
* ↑ ​Note 64.—The Japanese have been skilled weavers for many centuries, but a great impetus was given to this enterprise by the introduction of improved machinery and the use of aniline dyes after the opening of the country to foreign intercourse. Indigo has always been the staple dye stuff of the country. Twenty million yen worth is produced annually. But for colours other than blue and its various tones, aniline dyes are now imported to the extent of one and a fourth million yen yearly. The growth of the textile industry has also been greatly stimulated by the introduction of cotton yarns of fine and uniform quality. Formerly all cotton cloths were woven out of coarse, irregular handspun yarns, so that nothing like regularity of weight and texture could be secured. It thus appears that Japan owes the remarkable development of her textile industry to foreign intercourse.
* ↑ ​Note 65.—Japanese mills are kept at work twenty-three hours out of the twenty-four, with one shift of operatives, and their production per spindle is forty per cent greater than the production of Bombay mills and nearly double of the production of English mills.
* ↑ ​Note 66.—The railways and posts constitute additional examples. The Japanese have long been able to survey, plan and build their own lines of railways, to run the trains and to manage the traffic. For these achievements they deserve much credit. But their arrangements for handling, forwarding, and delivering goods are very defective, when judged by good Occidental standards, and their provision for the comfort of passengers leaves a great deal to be desired. So, too, their postal service invites criticism in some very important respects, if it merits praise in others. All such defects would soon be corrected if free recourse were had to the assistance of foreign experts, who have the advantage of familiarity with higher standards. It is unfortunate that a people so liberal in their adoption of the best products of Western civilisation, should hesitate to avail themselves of the best means of learning to utilise them.
* ↑ ​Note 67.—Another serious obstacle to the industrial development of the Japanese is their difficulty in deciphering foreign tastes. It results that in fields where their capacity is highest, their success is often smallest. They export some two millions of umbrellas at a cost of 10 1/2d. apiece; thirty thousand pairs of boots at 11 1/4d. a pair, and a hundred and ninety thousand dozen pairs of socks at 1s. 3d. a dozen. There can be no mistake about the shape and style of these things: a pattern alone suffices for guide. But, on the other hand, take the case of lacquer. In the quality and beauty of their lacquer the Japanese stand easily at the head of all nations. There, if anywhere, they should be able to defy rivalry. Yet what are the facts? Japanese lacquer experts, in their attempts to capture the New York market, have been distanced by Germans, who gauge the taste of the Americans with much greater accuracy, and produce lacquers better appreciated and cheaper than those of the Japanese themselves,—not finer lacquer indeed, nor nearly so fine, but better suited to the immediate purpose of its manufacturers.
* ↑ ​Note 68.—The average daily wage of twenty-six classes of labourers in 1885 was 15 1/4 sen per diem, whereas in 1900 it was 47 3/4 sen.
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