A Fantasy of Far Japan Part 25

Joseph H Longford on the commercial morality' of the j.a.panese, which has appeared in the _Contemporary Review_, I venture to write these lines for your perusal. I do so rather hesitatingly, as I have no desire to enter upon a dispute with that distinguished writer.

There is, it seems to me, a great deal of truth in what Mr. Longford says; but, at the same time, it is, I think, painted blacker on the side of the j.a.panese and brighter on the side of the foreigners out there than the facts warrant.

To begin with, it is true that in j.a.pan we had the cla.s.sification of the people into four, viz. soldiers, farmers, artisans, and traders, and thus traders stood the last. From this fact ordinary critics make a hasty conclusion that j.a.panese traders--in which term big merchants are included--occupied in every respect a position which was inferior even to that of common peasants; but this is not fair. In social matters they often occupied very good positions; in fact, there were many to whom special considerations similar to Samurai were accorded. The above cla.s.sification has much deeper meaning than a mere social caprice, and it is derived from a theory of political economy of the cla.s.sical China.

According to that theory, agriculture is considered the foundation of a nation, and commerce is a mere act of transportation of things already made, and, therefore, comparatively of little value. That such a theory should have existed in China is a matter of no surprise, for even in the Europe of a little more than one hundred years ago there flourished physiocracy, the doctrine of which was almost identical with that of the Chinese. The j.a.panese cla.s.sification of the former days was considerably due to the influence of that theory, and therefore the relative positions of the Samurai, farmers, artisans, and traders were more of theoretical notion than a social fact. This is a distinction very important to be kept in view when one discusses things j.a.panese.

That the Samurai as a cla.s.s despised dealings in matters of profit is an undoubted fact, but a trader's position was not so degraded as Mr.

Longford represents. He says:--

'Just as the training and social precedence of his ancestors for hundreds of years and of himself have made the j.a.panese soldier a model without flaw of loyalty, devotion, and courage, ready to sacrifice at any time life or property for his sovereign and his country, so have oppression and social degradation combined to make the merchant a no less striking model of dishonesty and timidity, unwilling and unable to make the smallest monetary sacrifice for his own or his country's fair fame.'

Surely this is sweeping a.s.sertion. If we take individual cases into account, striking characters in the ranks of merchants are abundant in records and in memory. Even in the movement which resulted in the restoration of the present Imperial regime, countless men whose origin belonged to mercantile circles may lay their claim of partic.i.p.ation to it. True, they were men who generally cast off their original occupation and enrolled themselves in the ranks of patriots, so that they may be considered as exceptions. But even as a cla.s.s in the ordinary sense of merchants they scarcely deserve that kind of condemnation. Osaka in former days had some resemblance to free cities of the West, and every one well acquainted with things j.a.panese knows what a well-developed mercantile system it possessed. So also the so-called Omi merchants.

Even with regard to merchants and tradesmen of all parts of the country there was little room for them to be so dishonest as the writer describes. Under the feudal system commercial occupations were almost hereditary. They had almost no freedom of removal from their accustomed abode. Their customers were the children or grandchildren of those who were customers of their fathers or grandfathers. If a merchant under such circ.u.mstances made dishonesty his customary trade, and expected prosperity, he would surely be totally disappointed, and would suffer a deserving penalty. Besides, in those days social sanction, from the very nature of the conditions under which they found themselves situated, was most severe. Yes! Merchants and traders of those days were honest, far beyond one can imagine. If any dishonesty or any shortcomings in respect to commercial probity have become observable, it is necessary evil produced by the changed circ.u.mstances of the time, chiefly on account of foreign intercourse.

Mr. Longford speaks of the early j.a.panese traders who flocked to the newly opened ports as being 'without exception adventurers with neither name nor money to lose, with keen wits and the determination to exploit to the utmost.' This is, in a measure, undoubtedly true, and accounts for the lamentable condition which for a long time existed in the trades at the open ports. But this is not the only cause. On the parts of foreign merchants who came out there to trade, there was much to be criticised; I mean to say, they were also mostly adventurers in a measure; they were also inconsiderate, even arrogant. A Western merchant who, leaving China, was pa.s.sing through j.a.pan, violated intentionally time-honoured etiquette against one of the most powerful 'Daimio,'

saying, 'I know how to manage these Orientals,' and was murdered in consequence. It is a good ill.u.s.tration of the kind of conduct of the Europeans of those days towards us; hence no sympathy existed between them and our traders--the dealings were viewed, naturally, very differently from those which they were wont to carry on with their native customers of several generations' standing. Business is business, so the common saying goes, but even in business mutual respect and friendly feeling go a long way. How can a model trade be expected to be created under such circ.u.mstances?

Then, again, in j.a.pan commercial goods were, and are still, to a great extent made by hand on small scales. No big industrial factories existed where one could order a large number of articles identical in every respect as one could do in Europe. Foreign traders, not taking these conditions into their serious consideration, often gave similar orders as they were used to do in Europe, and when articles delivered to them were found to be not perfectly identical, they often took advantage of that fact, and gave much trouble to the native contractors, who did not expect to meet with so much severity. There existed also very bad customs among foreign traders; the essence of those customs was known by the name of 'Haiken,' or 'Kankan.' These terms, literally meaning 'to see,' were used to veil the facts of detaining goods at their storehouses, often for an unreasonable length of time; in the meantime ascertaining the commercial conditions of their home, and returning the goods when they found the transaction was not likely to be beneficial to them. Native traders had serious grounds of complaint against those customs. As a matter of fact, at one time the matter was brought to a very acute state, and the native traders began to try to get rid of them by combination, but with little success. I imagine Mr. Longford will remember the incidents which occurred in connection with that matter in Yokohama years ago. I can also state on good authority that there were even some cases wherein foreign traders themselves practised, toward their compatriot at home, some actions which appear not to have been in unison with Western honesty, and taking advantage of our unfortunate reputation attributed the fault to the j.a.panese when matters were discovered. The notorious case wherein a large foreign firm dealing in silk, who took off the labels of native manufacturers and changed them into a single kind which he liked, was boycotted by them when the matter came to broad daylight, may also be recollected by him. Another thing which foreign traders were wont to do was that they often ordered things direct from small manufacturers at a cost far less than their real value. j.a.panese merchants often said that they could not compete with foreign traders, inasmuch as foreign merchants often got things at less expense than they themselves could. This is surely an extraordinary phenomenon. But the fact was that those foreign traders often succeeded in making that kind of contract either by giving some tempting inducement at the beginning or canva.s.sing several manufacturers one after another, always showing the last most advantageous offer, and bringing down the price by bargaining in a skilful and cunning manner.

Under such circ.u.mstances it was not surprising if those contracts were often unfulfilled, simply on account of the inability of fulfilment by the contractors. There was also another circ.u.mstance which caused commotion and disorder in all commercial dealing in j.a.pan. It is to be remembered that the new order under the new system of government, especially the abolition of the feudal system, widely changed the accustomed occupations of the j.a.panese at large. Chances for making wealth and for entering upon various enterprises almost entirely changed their hand. Besides, four hundred thousand families (2,000,000 capita) of Samurai, who gave up their hereditary allowances, now had to make their earnings chiefly by becoming traders or sometimes agriculturists, occupations to which they were entirely unaccustomed. They naturally experienced failure after failure. It was then that a new term, 'Trades of Samurai,' meaning thereby an undertaking which is precarious or even doomed to failure, came into existence. In one sense it was sad to think about, but the fact was so. Under such circ.u.mstances one can well imagine that dishonesty, or rather failure of fulfilment of promise, although against one's conscience, it maybe presumed, was often experienced even among our own community. This also might have had some indirect effects upon foreign trade.

Critics say that commercial probity in China is better than in j.a.pan.

It may be true; I shall not dispute. The Chinese are excellent traders, and besides, as every one knows, no such social revolution, as was the case with us j.a.panese, has ever taken place. That accounts for the difference between Chinese and j.a.panese traders in the first place, but that is not all. The Chinese are, individually speaking, very docile; they would not think of quarrelling with foreign traders, under whatever humiliating circ.u.mstances they might find themselves placed, so long as they could make some profit. But this is very different with us j.a.panese. Take, for instance, the case of a 'Rikisha' man; if he were a j.a.panese, and suppose a foreign rider whipped him, as they often do, because he did not run quick enough, the probability is, he would ask to be excused carrying the rider any further, or turn round to the rider and ask for an explanation. He would do so no matter whether or not he would get his fare; but if it were a Chinaman, the probability is that he would calmly suffer the treatment, and proceed just at the rate he could run, his thoughts being concentrated on obtaining as good a fee as he could get, and would be looked upon as an honest man in consequence.

This state of things exists in the matter of trade at large. Chinese tradesmen would suffer without anger, any arrogance or unreasonableness of foreign traders, and exert such wonderful patience in order ultimately to attain their objects, whilst j.a.panese merchants would sooner break the contract than suffer such treatment with such patience.

The consequence is that j.a.panese merchants are viewed in rather a bad light.

The effects of the Great Change, both political and social, have been subsiding already for some time, and the order of things at large has also begun to settle down. The condition of our mercantile circle is, in consequence, much changed; so also the att.i.tude and characters of foreign traders have begun to alter considerably. I am, therefore, most sanguine that all complaints of foreigners against our commercial probity will soon become a thing of the past.

I am sorry to speak about foreigners in this manner, but I am sure impartial observers will admit that what I say is not far from fact. At all events, their conditions were not so bright as Mr. Longford pleases to represent them to have been. Unfair criticisms are not calculated to promote the friendly feeling of nations, and my statements, which I believe no other than those of true fact, are hereby made more for promoting in future the goodwill which has already begun to exist between us and the Western traders of late years.[2]

SUPPLEMENT

There appeared an interesting letter, written by the Manager of the Publication Department of the _Times_, in the columns of that paper, October 7, 1905. As it has important bearing on the preceding subject, I take the liberty of subjoining it in full.--K.S.

THE CHARACTER OF THE j.a.pANESE PEOPLE

TO THE EDITOR OF THE "TIMES"

Sir,--In last Monday's issue of the _Times_ there was a long letter from the Right Rev. William Awdry, Bishop of South Tokio, j.a.pan, in which he says that 'in general a j.a.panese would value the promise of an Englishman more than the bond of a j.a.panese'; and that the j.a.panese are deficient in a certain group of qualities, including honesty in trade.

It seems to me that it would be unfair for the _Times_ to allow such a charge against j.a.panese integrity, endorsed by a bishop, to go unchallenged, when the _Times_ has, in its own office, records that prove a promise made by a j.a.panese to be at least as trustworthy as a promise made by an Englishman. During the past eight years the _Times_ has sold, in almost every country in the world, sets of the Encyclopaedia Britannica on the instalment plan, giving credit for periods of two, three, and four years. The regularity with which such payments are made is certainly a fair test of the average honesty of any nation, and a much more severe test in the case of j.a.pan than in the case of England, because it is more difficult there than here to enforce payment by legal proceedings. Ninety-five per cent. of the encyclopaedias sold in j.a.pan were sold to j.a.panese, not to foreign residents, and the statements I am about to make refer exclusively to purchases made by the j.a.panese themselves. In j.a.pan, as elsewhere, each purchaser, when he signs his 'order-form,' promises to pay, on certain dates, certain sums of money.

In j.a.pan the monthly payment was 10 yen, equal to about a sovereign, while in this country the amount was a guinea. In Great Britain less than half the payments arrived on the day promised. In j.a.pan less than 1 per cent. of the payments were even one day late, and more than one-half of the payments were made the day before they were due, because the j.a.panese did not like to run the risk of any accidental delay that might make them even one day late. The cost of collecting these instalment payments in j.a.pan is less than half as much as in England, simply because the j.a.panese are so punctilious that clerical labour and postage are not expended in reminding them that their payments are overdue. They seem to look upon every debt as a debt of honour, which must not be forgotten for even a day. There is certainly no such delicacy of feeling in this country about commercial transactions.

I find it difficult to believe that the Bishop of South Tokio is right when he says that the j.a.panese do not trust one another; and I know that he is wrong if he in himself believes, as he implies, that the j.a.panese are not 'honest in trade.' But I quite admit that Englishmen who have long resided in j.a.pan did not believe that it would be prudent for the _Times_ to adopt in j.a.pan the instalment system of selling books, previously unknown there. When the representative of the _Times_ arrived in j.a.pan to sell the _Encyclopaedia_, he naturally asked English residents there what they thought of the project. With one exception the answer was: 'You cannot sell the _Encyclopaedia Britannica_ here because almost every English and American resident has already obtained a copy from England, and, of course, the j.a.panese will not buy--fortunately for you, because if they did they would not pay.' The only English resident who did not say this said: 'Of course you can sell any number of _Encyclopaedias_ to the j.a.panese, but you will never be able to collect the payments when they have once got the books. No j.a.panese will pay for the _Encyclopaedia_ when he finds he can get it without payment.' In the face of this advice, the instalment plan of sale was adopted, with the results above described. I many add that the j.a.panese bought five times as many _Encyclopaedias_ as were sold in France and Germany combined, fifty times as many as in Russia, more than in any other country except India, Australia, and the United States.

When I see a bishop of the Church of England, who has lived in j.a.pan since 1898, write with so little appreciation of the j.a.panese, I wonder whether some of our countrymen are not as blind as the Russian statesmen who, in the early days of the war, described the j.a.panese as 'yellow monkeys,' and as blind as the Amba.s.sador of the Tsar who made the statement in Tokio, before the war, that the mobilisation of one army corps in Russia would frighten the j.a.panese into immediate submission.

No one in the _Times_ office, at any rate, can doubt that the standard of integrity among the j.a.panese is so high that when young men, who have bought the Encyclopaedia, abandoned their employment to go to the front, their families promptly paid the instalments due, under circ.u.mstances of the utmost difficulty.--I am, sir, your obedient servant,

The Manager of Your Publication Department.

Printing-house Square, E.C., _October 5_.

[1] _The Magazine of Commerce_, August 1905.

[2] See the note at the end of the volume.

VII

j.a.pAN AND FOREIGN CAPITAL[1]

j.a.pan, far from becoming antagonistic to the occidental nations, as it was prognosticated by some of the Continental journalists, has given another proof of her readiness for the identification of her economic interests with those of the occidental people.

Hitherto in j.a.pan there has been no law which regulated the mortgaging of a railway, or a mining enterprise, or a factory, together with its working system, as a corporation, that is to say, mortgaging the whole system of a railway, a mining enterprise, or a factory as an economic whole, comprising not only each particular material object but also all the organic components of its working system as the subject matter of mortgage. A radical change has now been effected in the matter.

According to the j.a.panese laws there are two methods for a commercial company in contracting a debt. One is the ordinary borrowing of money from a creditor, and the other is borrowing in the shape of debentures by public subscription. Now in ordinary borrowing of money the liability may be secured by mortgage, but the debentures could not be secured by mortgage, although of course the liability extends to the whole property of the company.

The first effect of the new change is the provision which enables companies to guarantee debentures by mortgage, and the second effect is the provisions which relate to the creations of economic corporations of railways, mining works, or factories for the special purpose of inst.i.tuting mortgages of their economic ent.i.ty.

To make the matter easier to comprehend, I will first explain it with regard to railways.

The permission of the Government originally given to the company is in the nature of a licence or concession which is to be viewed more in the light of a personal matter of the original company, and therefore it could not be a subject matter of a public auction, and therefore according to the old law, if a railway company becomes bankrupt, all the material property, either movable or immovable, would go to new hands, but the licence itself cannot but become extinct with the dissolution of the original company, viz. the original grantee.

This being so, if a railway company fails to fulfil its liability for debenture and goes into bankruptcy, the ultimate result would be that the railway system would be broken up, and the creditors would get their satisfaction only from the sale of each piece of the material property sold by public auction. Even in the case of ordinary debt, whereby all the material property can be mortgaged, the result would be practically the same.

All these inconveniences have now been removed by a series of new laws pa.s.sed by the last session of the Imperial diet and promulgated on March 13, 1905, by the Imperial Government. The articles of the laws are very numerous and minute, so that it would be unnecessary to dwell upon them here in detail, but the more important parts may be summarised as follows:

_(a)_ The economic ent.i.ty of a railway company may be const.i.tuted a special economic corporation for the purpose of mortgage.[2]

_(b)_ In default of payment of the mortgage liability, the whole, _i.e._ the corporation, may be subjected to auction. This provides the means for transferring, together with the material properties, the original permission of the Government, namely, the licence, to the purchaser, viz. a new company.

_(c)_ A company, which in reality may be taken as a syndicate, may be formed for advancing money by means of debentures. Such company may acquire legal recognition and may represent the creditors of debentures.

It forms a particular kind of commercial company, and is called 'trust company.'

_(d)_ At the option of the creditors, means of compulsory control of the railway in the interest of creditors are also provided for in the laws.

_(e)_ Special provisions are made to meet the cases where the syndicate and investors are of foreign nationality: namely, the means of recognising foreign syndicates by the j.a.panese Government, and also the means of affording convenience for foreign investors.

_(f)_ Further provisions are made for facilitating the registration of const.i.tuting the said corporation, and the registration of the mortgage thereof, for these affairs, as far as railways are concerned, are now entrusted, by the new laws, to the Minister of Communications, to whose control the railways belong, and not to the local courts of law, as is the case with all other kinds of mortgages.

This change of our laws gives very great facility to foreign investors who may be willing to lend money on railway securities.

The case of mining enterprises were similar because they are also based on licences. For them also much the same changes have been effected by the new laws, so that their economic ent.i.ty may now be mortgaged in the interests of either an ordinary creditor or investors in debentures.

The cases of ordinary factories differ in origin from those of the railways or mines, they not being based on a concession or licence like railway or mining enterprises. But for them also the new laws have made provisions for the means of const.i.tuting corporations for the purpose of guaranteeing debenture by mortgage. Provisions have also been made for guaranteeing debenture by mortgaging ships, any definite property either immovable or movable, or any legal claims which are secured by written instruments.