Page:Japan by the Japanese (1904).djvu/420

as a rapid development and growth of the body often causes a lack of proportionate and corresponding degree of growth in its component parts, thereby causing a state of sickness, so in a country where a sudden expansion of its industry and commerce have taken place periodic vicissitudes in its economic affairs can hardly be avoided. The rapid extension of Japan’s commerce and industry meant an increased importation of ships, rails, machinery, as well as factory accessories, thereby causing the balance of trade to be adverse, while among the business companies started at the time of the industrial expansion not a few were without proper foundation for the work and business projected; and some companies were started as a mere speculation. I give here a table showing the growth in the number of companies in the seven years ending 1899:

Thus, it was inevitable that the time must come when the substantial business concerns and the weak and speculative undertakings should be separated from one another. Until 1900 everything went well. The call for payment of shares was promptly met, and the transactions of business companies with the banks went on without a hitch; but, as stated before, the work of sifting the chaff from the wheat was going on when the result was apparent. As might be expected, not a few honest concerns had to suffer to some extent. The greatest cause of the failure of unreliable business concerns consisted in their over-issue of promissory notes, and some of the smaller banks depending upon the payment of those notes first exhibited signs of suffering. This state of affairs once made known, small depositors very naturally would make a run on those banks, while the larger and more substantial banks could not altogether escape the effects. Fortunately, however, the larger banks were sufficiently provided with funds to meet the pressure, and the pessimistic prophecies were disproved.

It must be clear to anybody that money deposited in a bank does not mean its safe custody in its vaults, and that any sudden and unexpected run on a bank would cause the fall of even a large and substantial concern. It must also be