A Handbook of Modern Japan

by Ernest W. Clement

In 1897 Japan adopted the gold standard, so that exchange fluctuations with the Occident are slight, and the Japanese currency has a fixed value, at the rate of about 50 cents for the yen.[38]

Concerning the prospects of industrial and commercial Japan, it may be well to note the views[39] of Baron Shibusawa, one of the foremost of Japanese merchants and financiers. In referring to the capacity of the Japanese for business, the Baron says:—

“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 honor credit as they should, which is so important a factor in financial success. These four peculiarities are to be met with in 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, 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 harbor. 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. The capital we have in the country is not enough. So what is now 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 be quadrupled. The very idea of sharing with an outside power is distasteful to them. For instance, I have been endeavoring for many years by word and deed to obtain a revision of the laws relative to the ownership of land in Japan by foreigners. I may say that Marquis Itō 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 enterprises. There are very many uncompleted 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 may have ceased to exist. The entire loss caused by the failure of Japanese business enterprises would thus be borne by the Japanese.

“The day will come when 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 present is that, while the Japanese can imitate everything, they cannot, at the same 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 very fair in quantity at present. Raw silk and tea are abundant, while coal is plentiful, as also copper and silver; gold is not so much so. I hope to see our plentiful water supply turned into 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 its export trade may be made to the neighboring countries. In Hokkaidō 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 Kiūshiu 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 and that 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.”

We also take pleasure in quoting the same high authority upon the subject of the present financial situation in Japan, as follows:[40]—

“The present financial difficulty in Japan is only the natural sequence of the over-expansion of business of some years ago. 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. They do not necessarily injure the real financial standing of the country. The peculiarities of the Japanese business character have much to answer for in the way of increasing the appearance of financial insecurity during the times 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 over-expanded its enterprises after the war. The depression reached its height in 1900 and 1901, and businesses were abandoned or reduced because it was not such easy work as formerly. By proper management our national income can be made still greater than our expenditure.”