The Birmingham age-herald., 1908-04-08
How American Panic Affected
 Sons of Nippon
MILLIONS IN SILK ON HAND
Many of the Largest Factories Have Shut Down In Japan as a Direct of the Money Strineency
 In America.
BY FREDERIC J. HAskIN.

itself the blessings of western civiliza- ton it was inevitable that the curses must be included. Today it is suffering
 from having taken a flyer at frenzied finance. After the war with Russia. the Japanese rushed headlong into a boom. The collapse has come and the nation is gasping. It might have borne the burden of it's own folly without great trouble but the sins of America are also visited upon Nippon. For every American girl who is pouting because that horrid Wall street has deprived her of a new silk gown. there is sorrowful almond-eyed maid in beautiful Japan who mourns the loss of the six cents day which she earned by feeding silk worms Among the most marked effects of the recent panic in the United States was the falling off in dema>1 for silks. Consequently, the godowns of Yokohama contain S50.00O,000 worth of raw silk at a time, when in a normal year they would be empty. This silk is unstable at a profit, and every time bale changes hands now it means a loss
 The silk grower in the country did not forsee the financial crash, neither did his country banker. The grower needed ready money and the banker advanced It on the security of the silk. Now the price has fallen and the silk is practical ly unstable The silk grower cannot pay the banker The banker must pay his depositors. From these things come bank runs, from bank runs come failures, from failures comes loss of employment and from loss of employment comes star Ind in 1 cents a day is high wages for an able bodied man.
 If there had been money in the coun- try the temporary cessation of Amerl- can purchases here would not cause such serious embarrassment But Japan has never had much money, and what little it did have has gone into the great industrial companies organized during the boom which started a few months after the close of the war with Russia ana which tumbled into nothingness with the crash of last year. The Japanese govern ment tried in many ways to restrain tiiS fever for speculation, knowing that the resources of the nation were not SUI ficient to sustain a half billion dollars worth of new industries at this time. But the advice was not needed and specula- ton stopped only when the bubble burst. Now the government seems to forget US role of friend to commercial interests ana refuses to take any steps to relieve con ditions. On the other hand, the burdens of it's people are augmented by the levy of new taxes although the war tax has not been lessened after three years of peace. And of the tax money collet- ed from these poverty-stricken people, the government spent last year:
 On the army and navy ....sll570 04,63o
 On education ........... 4llS,4O
 The war with Russia brought to Japan so many hallelujahs and banzais from all parts of the world, that the Japanese were almost convinced tat there was nothing which they could not do. It was natural that they should turn to indus trial fields and seek to astonsh the world there as they had done in war. Com panies were organized to exploit the meagre mineral resources of the islands, others to manufacture raw materials to be brought from China, others to take ad- vantage of growing internal business, anu still others to push commerce lnto foreign lands. Millions were subscribed and before the ink was dry on the papers oI the incorporation dividend would be declared This artful dodge deceived the innocent lamb of Nippon and he rushed to his little Wall street with his sav- ings The prices of shares scared to the skies.
 Then came the world-shaking financial troubles Copper Japans greatest min erdl product dropped to the bottom Then came the silk disaster and Japan's great est domestic industry was paralyzed. The balance of trade in 1906 had run in Japan's favor and it's people boasted that theirs was an exporting nation. Wlthln a few months the exports dropped almost half The Bank of Japan pays F per cent dividend and is considered thor oughly sound institution. The par value of it's shares is 200 yen. GA yen is equivalent to 50 cents In American money) In a few months the market value dropped from S3O to 56s yen. The Toko Electric railway stock, par value 30 yen dropped from 106 to 59, and now muni- equalization of the property is in sight. The Osaka Spinning company has never missed a dividend and it pays 20 per cent annually. Its shares, par 90 yen, fell from 126 to 79 in the face ot the one fifth dividend.
 How foolish the payment of such divi
 dends has been proved in the very case of this spinning company. The Jap anese cotton spinning mills. of course, use foreign raw material They have ex- cellent mills, and they have good labor at next to nothing compared to the cost in American cotton mills. At one time they
 had built up good trade in China, the greatest consumer of cotton among the nations. 3ui the boom caused an effort to establish weaving on a larger scale in Japan. dnu the small weavers were l greatly encouraged. They bought the | Japanese ydlns at fancy prices and tire | spinners tllci eupon allowed their stable i business in China to go by default. Now
 the East Indian yarns have supplanted | the Japanese yarns in the Chinese mar | llet, the home market is dead and the i Japa1iese spinners are making yarn to
 store in their godowns The dividends | have exhausted the treasury and ruin Is | imminent.
 l Frenzed finance has some queer kinks ! in it in this part of the world. The Jap l anese business men seem to get at things | from a different angle as they look on l the world from their oblique eyes. The cotton spinners had a meeting and dis | cussed the loss of the foreign business. | Now, it has been the fashion in Japan | to bolster up by a subsidy any business l too weak to stand alone. Japanese ships | are subsidized, some of them proftably so. These people have seized on the idea l of a subsidy as a cure for every com | mercia ill, and the subsidized concerns 1 are legion. So the cotton spinners de- | cded to tax themselves for a private sub
 sdy in order to give a bounty on every | pound of yarn shipped 10 a foreign mar
 ket. This would, they said. permit them