Evening star. [volume] (Washington, D.C.) 1854-1972, 1901-08-23
CONDITIONS IN JAPAN
REASONS FOR THE ECONOMIC DE.
PRESTON IN MIkADO's REALM.
Too Many Public Enterprises Under-
taken With the Indemnity OBJ
tained From China.

| Tokyo Letter Honolulu Advertiser
The following given In a Tokyo paper as
| the views of certain economist summa-
rizes the present economic depression Of
Japan in happy terms. and may be read
with interest:
Since last year the want of capital has
been keenly felt in every branch of indus
try. and the rate of interest has risen,
while stocks and prices in general have
| fallen considerably. The circulation of
money has been paralyzed and large stocks
| OF merchandise are lying idle here and
| there, unable to find sale. Manufacturers
are so hard up that they cannot afford to
| buy necessary materials. yet so long as
| they have each a certain number of hands
| under them they must find some means to
keep them occupied. Hence many of the
! factory owners are drawing money at
usurers' rates, and several firms have
| failed and banks suspended payments. 1t
| Is no wonder, then, that posters of offices
| to let" are daily on the increase even in
the most prosperous streets of the capital.
Many of those firms that are apparently
doing well are probably on the brink OF
ruin In short. the panic which has at
tackled other countries has not made an ex-
| ception of Japan.
Result of Sudden Riches.
The late Japan-China war having re-
warded the country with more than three
hundred million Yen for her victory, the
| nation has been pulled up, so to speak,
| like poor man who has suddenly risen to
| fortune by lottery and has INDUCED in
| buying luxuries and starting unnecessary
| works and gone on increasing the cost Of
living. The result of this extravaganza Is
| the present economic depression, which
may be compared to the stomach COM
plant OF greedy eater who gormandizes
han eyix-
| lacks him. AS fever begins to subside at
certain stage, so an economic disturb
| ance has its end: and a fever patient
mas to suffer various pains in his conva-
lescent condition. so the economic world
! mas to witness many unpleasant incidents
| before 1t completely RECEIVERS from the
| state of panic.
All works and establishments which have
| been started In days Of temporary activity
subsequent to the war with China without
regard to national resources, being real
obstacle to the healthy development of the
country. must be done away with, and will
| have to fall by their own weight il the
economic convalescence is really to follow,
painful as 1t Is to see mercantile or indus
| trial concerns failing one after another
Unless such concerns fall down. the proper
course OF the natural current of affairs
| will remain blocked up, and there will be
| no hope Of Improvement Various enter
priseS started beyond the peoples actual
means are now fast dwindling away the
capital sustaining them having been ex-
hausted: and business In general Is return
| ing to its original scale-a scale propor-
tionate to the means of capitalists Any
movement that has gone too far must al
ways have its painful reaction. and for
this capitalists can blame nobody, as the
fault lies In themselves.
Bank of Japan's Attitude.
Under the present circumstances It is
quite natural for certain section of bust
ness men to cry for measures to relieve
fhafr lott he
| however, restricted It's advances by with
drawing its notes from circulation, and has
| shown reluctance to respond to the gen.
eral demand for capital, Judiciously, we
believe. A man who is just recovering
from his long illness and feels a keen ap-
petite should not be given too much food,
otherwise he may injure his stomach and
be i'll again. The complaint raised in GER
| tain quarters that the bank hesitates to
| make advances on such an important sta
| pie as silk Is like that of greedy patient
bewafling the insufficiency of his diet. The
excess OF imports over exports has con-
| ttnued for years and the ef1ux Of specie
knows no end. In this precarious state Of
affairs it Is but proper for a central bank
to raise it's rate Of interest and withdraw
its notes from circulation In order to MAIN
tain the stability of the conversion sys-
tenn and take steps to lead the economic
world gradually back to its normal condi-
ton.
With the Bank of Japan pursuing such a
course. to be cautious correspondingly, in
asmuch as they cannot freely utilize the
capital Of the central bank even If they
may have plenty Of good securities or
drafts in hand, while their creditors are
apt to be alarmed by absurd reports and
ready to draw of their deposits at any
moment. Every bank has, therefore, to
reserve a large amount OF funds against
its creditors so much reducing the amount
of money in circulation. Moreover, the
credit Of individuals usually fiuctuates at
times. One who could collect million
yen yesterday may not be able to borrow
half as much today. The necessity OF
keeping large amounts Of reserve funds.
coupled with the uncertainty of the credit
Of individuals. renders 1t impossible for
any bank to make advances as freely as
at better times. 1t Is then too much to
say that banks are reluctant to lend; on
the contrary, they are always anxious to
lend as much as they can afford to. IL
they can only be certain of the resources
of their debtors.
Brighter Prospects.
How long the present depression will last
is a question which everybody naturally
asks. Japan's economic organization is on
a very limited scale as compared with
that of Europe or America, and its differ
emit parts are not related to one another
as closely as in other countries. This want
of close relation does not make the whole
work smoothly under ordinary circum-
stances; but then there is this advantage,
that the failure Of few banking, indus
trial or commercial concerns does not tell
on the whole to any serious extent. In a
country where the credit system Is not
fully developed such seems to be always
the case. Many firms apparently doing
well may really be on the verge of ruin,
and the comparative rarity Of cases OF
bankruptcy may partly be accounted for
by the fact that Japan has not yet adj
| vanced to the stage when single failure
may suspend the vitality of the whole
economic mechanism
Be the theory whatever 1t may be, the
Bank of Japan firmly sticks to the policy
of withdrawing its notes, and other bank
ing concerns have to use the utmost eau
ton in making advances; while all firms
whose resources are exhausted have been
doomed to their natural fate, and 1t seems
no firm of questionable standing remains
in existence-the long-continued depression
has so thoroughly swept and cleansed the
business world. This must be a rude shock
to Japan. from the smarting effects of
which the country may have to suffer for
some time to come.
Now that the people have become eau
tious, however, We may console ourselves
by the fact that the worst has already
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