Japan by the Japanese/Chapter 17.1

Japan has made wonderful progress in her civilization. But it must be remembered, above all, that Japan, as to her industrial and commercial career, is a young country, and that her progress has been so rapid as to call forth the opinion abroad that her progress is irregular. Only thirty-four years ago, at the time of the Restoration, the industry and commerce of Japan was very low in public opinion and in the social scale, the military and political classes only being considered honourable. I began the new era with the same idea, and for five or six years pursued a political career, rising to the position of Vice-Minister of Finance. Then I realized that the real force of progress lay in actual business, not in politics, and that the business elements were really most influential for the advancement of the country. So I gave up my political position and devoted my life to business, where I have been continuing some thirty years until to-day. I soon came to the conclusion that the capital of an individual was not large enough to accomplish very much, and ​I then became the means of introducing the company system into Japan. The idea was successful, and the Government approved of it. Since then I may say that every industry in the country has increased, some twenty times, some ten times, and none less than five times.

There are, however, four peculiarities in the Japanese character which make it hard for the people to achieve business success. These are: Firstly, impulsiveness, which causes them to be enthusiastic during successful business, and progressive, even to rashness, when filled with enthusiasm; secondly, lack of patience, which causes easy discouragement when business is not so successful; thirdly, disinclination for union; and fourthly, they do not honour credit as they should, that which is so important a factor in financial success! These four peculiarities are to be met with in most of the Japanese business men in a more or less marked degree. Although Japan, as a country, is old, yet her commercial and industrial career being new, as stated above, there are necessarily many points of incompleteness. For example, although we have many railways, yet there is no close connection made between the railway-station and the harbour. Again, although we have railways, yet we have no appropriate cars, etc. To complete such work, and to open up the resources of the country, and to allow Japan to benefit from them, we need more capital. But the capital we have in the country is not enough. So what is wanted in Japan is foreign capital. A great proportion of the Japanese people, however, are opposed to the idea of sharing any profits equally with any other nation. Their exclusiveness in this respect is a distinct relic of the old era. They ignore altogether the fact that with the assistance of foreign capital the profits would practically be quadrupled—the very idea of sharing with an outside Power is distasteful to them. For instance, I have been endeavouring for many years by word and deed to secure a revision of the laws relative to the ownership of land in Japan by foreigners. I may say that Marquis Ito and other public men are of my opinion in the matter. Because, however, of this exclusive element in Japan, it has still been found impossible to allow foreigners to own Japanese land. Until this change is made, foreign investors will naturally feel that there is little safety for their investments. I am also anxious to introduce the idea of a system of trusteeship, in order to encourage foreign nations to invest their money in Japanese enterprise. There are very many incompleted works in Japan which need outside money to finish them, and which would return good profits. I feel assured that it would be possible for prominent Japanese bankers and capitalists to make themselves personally responsible for the money of the foreign investor. By such a system the security of the ​investment would be much increased, and the foreign investor would have the assurance that his money was safe, even if the business in which it had been invested ceased to exist. The entire loss caused by the failure of Japanese business enterprises would thus be borne by the Japanese.

The financial difficulty in Japan in 1900–1901 was only the natural sequence of the overexpansion of business of some years back. In every country there are waves of prosperity followed by periods of depression. I have known, in the economic history of Japan since the Restoration, five or six such waves, and they do not necessarily injure the real financial standing of the country. The two first peculiarities of the Japanese business character have much to answer for in the way of increasing the appearance of financial insecurity during the time of depression. After the prosperous times of 1893 came the war with China and the subsequent indemnity. Much of the money paid by China was spent in Japan, and the Japanese people came to the conclusion that this increased circulation of money would be permanent. They acted impulsively in many enterprises, and rushed into all kinds of business, because the Government had overexpanded her enterprises after the Chino-Japan War. Then came the depression, at its height in 1900 and 1901, and the second characteristic came to the front; businesses being abandoned or reduced because it was not such easy work as formerly. While I agree with Viscount Watanabe in his view on the financial situation of the country in 1900–1901, I do not agree with him in his opinion that it must inevitably result in national bankruptcy. This is not so, because by a proper management our national income can be made still greater than our expenditure.

I do not think that it will be easy for Japan to compete in American or European markets as far as the production of everyday manufactured goods is concerned. The superior machinery of the older countries necessarily tends to cheapen the cost of production of the finished articles. Besides, Japanese workmen, though their wages are cheaper, are not as a rule skilled artisans. It is true that there are many such, but it will take two or three generations before the mass of labour is equal to that of older countries in skill. Until that time comes it is more profitable to export unfinished goods to foreign countries to be finished there. This pays far better than to attempt to produce the finished articles here. I think, however, that we can supply the Oriental markets (Chinese and Corean) even now better than other nations can do, although the trade is necessarily more in the form of an exchange of products than in any other way. For instance, from Corea we receive rice, beans, hides, bones, and we send there cotton-thread, cotton-stuff, silk cloth, ​such articles as are in use among the Coreans. To Europe and America we export tea and raw silk, roughly woven and undyed or in thread, coal, copper, and some fine porcelain. The latter is, however, not very acceptable in foreign markets, and only a small art export is to be hoped for. It may come, and I hope it will, that Japan will compete with the Powers already in the field on all lines of manufactured goods, but this time must necessarily be far distant. The trouble at the present is that, while the Japanese can imitate everything, they cannot, at the present time, invent superior things. But the trade of the Oriental countries will come to be regarded as Japan’s natural share, and she is already well capable of supplying it.

The resources of Japan are very varied, and are very fair in quantity at present. Raw silk and tea are abundant, while coal is plentiful, and also copper, but silver and gold are not so much so. I hope to see our plentiful water-supply turned to good account and harnessed to produce electric energy. This would be a great saving of expense, and would cheapen the cost of production very much. Oil has been found in several districts, and will take the place of coal to a large extent; and it is possible that, if fully developed, it may be exported to the neighbouring countries. In Hokkaido we have rich coal and silver mines and oil wells, while in Formosa we have rich gold mines. The iron we use in our iron works in Kyushyu comes partly from several mines of Japan and partly from China.

My hope for the future is that foreign capital may be brought into the country, that by a successful struggle against the four Japanese peculiarities the economic position of the country may be made so secure as to leave no doubt possible in the mind of the world as to the stability of the Japanese Empire.

All the countries of Europe vie with one another in developing their own respective commercial interests. The war, not of soldiers, but of business men, is constantly being fought nowadays all over the world, and the crown of victory will rest with those nations which are successful within their commercial enterprises. The lamentable condition of our trading class will result in hampering the progress of the country. I was warmly received by the prominent men of the world, but on what grounds? The President of the United States praised Japan because of her military prowess and fine arts. Are not Germany, France, and England praising Japan up to the skies upon the same ground? If the warm reception I received abroad is based on the feeling that I came from a country known for its military exploits, I must confess that that reception is a death-blow to our hopes. Because too much militarism, I am afraid, ​will sap the very life of a nation. I understand that the Chambers of Commerce of Japan desire to extend their commercial interests to foreign countries. If that be really the case, local feelings should be done away with; at the same time they must seek commercial knowledge far and wide. No one can be more vehement than I am in opposing the spirit of exclusion which characterized our people. Let me remind you, however, that capital is like water: it flows freely, and runs to the spot where the attraction is greatest. Should we unite our efforts to make Japan as attractive as possible, I am almost certain that foreign capital would be introduced into Japan. While, on the one hand, we insist on the open-door policy for commerce, yet, on the other, still retain the old narrow and exclusive spirit, we can do nothing. Our policy is suicidal. Progressiveness and conservatism are inconsistent. To be plain, I am afraid that our laws are, in a certain measure, a barrier against the introduction of foreign capital. Hence there are three points which should be carefully considered:

1. Any laws or organizations which form obstacles to the world-wide expansion of Japan’s commerce should be done away with.

2. We all should unite in exchanging our ideas with the leading men of the world, thus acquainting ourselves with the position of foreign commerce, while at the same time making it our national policy to give foreigners a clearer insight into the real condition of Japan’s finance, economics, commerce, and industry. Both the Government and the people should unite in this attempt. I am told that Russia is employing every possible means in attaining the same end as ours.

3. The last, but by no means the least important item, is the rectification of the Japanese commercial morality. In spite of myself, I hesitate to say that Japan has as high morality in commerce as England, America, and Germany. As long as the present low state of morality continues, all our attempts to obtain capital from abroad will be absolutely futile. Laws may be improved, but the barrier of a low morality is by far stronger than that of bad laws. Let us use every possible means to improve the standard of our business morality. Another thing is that too much stress cannot be laid upon the necessity of unity. The Japanese are, indeed, a strange people. Individual attempts are good, but when they are made in a body troubles are sure to arise. I beseech all the business men of Japan to hold steadfast to the principle of ‘in union there is strength.’