The daily morning journal and courier., 1907-06-22

lore the war, for the national wealth
 ana resources have not been increased
 10 say the least of it, by the war. The
 land and people remain practically the
 same It seems that Japan is making
 an effort to capitalize her recent vic
 tory before it's influence upon the
 imagination of the world wanes, and
 before it's fruits turn to Dead sea ap-
 ples In the mouths of some western na-
 tons.
 | Many of the enterprises which afford
 the basis for the new companies have
 no doubt, a good chance of prospering;
 just which 1t would be difficult, per
 haps impossible to say. But many of
 them have, so far as I could learn, no
 hrmer foundation than 8 plausible
 prospect Take. for instance, some of
 the mining companies. Now a new min
 Ing venture is not a particularly sound l investment anywhere, ad those in Jap
 an are no exception They are largely
 based on somewhat vague possibilities
 for development of prospects in Korea
 and Manchuria. And other important propositions depend, at least in the be-
 ginning, upon government support and
 assistance.
 | The method by which the government
 stalks the investor operates, as do so
 many of Japan's new activities, through
 tho banks. It Is usually something like
 this: A stock company will be regu- l larly organized, it's stock duly subscrib- ed for, and part of the capital paid in,
 the banks, If necessary. advancing the money Then bonds will be issued, and | placed if the government is supporting the enterprise, with the Nippon Glnko
 or one of the other great banks which | have branches and agencies all over the world, to be presented to foreign in-
 vestors. The Japanese bank will not do | this directly. It will split up the bonds I In portions to be distributed in various l countries, as the situation seems to
 warrant, and the portions be allotted to
 the agents or correspondents of the | Japanese banks in those countries. For instance, some of the bonds of
 an electric lighting and power com pany with charter to conduct cer- tain business in Japan, or one holding
 mining concession in Korea or Man
 ehuria, may be sent to a large banking house in Wall street which is the cor
 respondent, say, of the Nippon Ginko.
 These bonds, by means of the custom ary process. will be offered by the American bank or house to their cus- toners through their regular channels, With the statement that the Japanese government guarantees the interest on the bonds. To the average investor in such securities this will probably Hook pretty good" and he may put his sur plus cash, if better investment does not just then offer, into the bonds This money goes to Japan, less the commission to the American concern (usually very liberal in the case of some of the Japanese foreign loans netting nearly three per cent.) and there helps finance the new national system
 The investor probably figures that even if the enterprise, of which he, of course, knows comparatively nothing, should fail to make money his interest is secure; and under ordinary circum- stances this would be true, since most governments nowadays habitually meet their obligations. But here is clearly a different condition. The Japanese government is going into this that 1t is really taking the same chance as the foreign investor in the success or failure of the enterprise
 In this connection the legal status of foreign investments In Japan be- comes pertinent, for if enterprises in which foreign capital is invested can not be operated at a profit and conse- quently fall, the only security for the | capital will be whatever property may | be owned by the business. And as- l suming that such a company fails, this | question will arise in cases where the | interest on it's bonded debt is guar anteed by the government; If the gov ernment after the company has gone into bankruptcy and ceased to oper- ate. obligated to continue to pay the in- terest on the bonds of an extinct en- terprise, which would be forever un- less the government paid the princi- pal?
 The equivocal legal standing of for signers and foreign interests in Japan has often been discussed, and efforts nave been repeatedly made to better their position, but so far without suc- cess. To put 1t flatly, the position of Japan toward the foreign investor she hopes to bring to the financial support 1f her new system amounts tob this: We want your money but you must rust 1t absolutely to us" As for the great National advancement company t has already been criticised in Japan is a plan te draw another great sum rom the people, to be used in carry ng out the governments policy-or simply a new way to float a domestic oan without liability for the prlnci- 'al should it be lost In the venture. In some of the methods now being mployed by the Japanese government o promote the new national policy is commercial and industrial 'aternalism in it's extrernest form. Not nly are municipalities throughout s he island empire undertaking to own | nd operate their transportation, light ( lectric power. and other plants, but ( he national government is actively I aking hand in commerce and indus- l ". Here we find, for the first time,
 great government operating as a J usiness corporation. T In entering upon this extraordinary q nd yenturesome policy Japanese e tatesmen are apparently impelled by t on1pleX and often somewhat antagon- |