RICE PLANTING, PROVINCE OF HOKI
FROM A PRINT BY HIROSHIGE
The trade, commerce, and industries of Japan appear to me to be, on the whole, in a healthy and flourishing condition. In them, and of course in her industrious population, Japan possesses a magnificent asset. The country is rich in undeveloped resources of various kinds, the people are patriotic to a degree, and I feel sure that the additional burdens which the recent war with Russia has for the time entailed will be cheerfully borne. I am confident, moreover, that under the wise guidance of the Emperor and her present statesmen Japan will make successful efforts to liquidate her public debt, to relieve herself of her foreign liabilities, and generally to proceed untrammelled and unshackled on that path of progress and material development that, I believe, lies before her, and which will, I am sure, at no far-distant date place her securely and permanently in the position of one of the Great World Powers.
CHAPTER VIII
JAPAN’S FINANCIAL BURDENS AND RESOURCES
THERE are a good many people, some so-called financial experts among the number, who are of opinion, and have expressed themselves to that effect, that the financial position of Japan is an unsound one. They depict that country as weighed down with a load of debt, mostly incurred for her warlike operations against Russia, and the revenue as largely mortgaged for the payment of the interest on that debt. Some of these experts have told us that the facility with which Japan was able to raise loans on comparatively moderate terms in the European money-markets, and the rush that was made by investors to subscribe to her loans, are matters which must have a baneful effect on the rulers of Japan. These latter, we are assured, found themselves in the position not only of being able to raise money easily, but of positively having to refuse money which was forced upon them by eager investors when the Japanese loans were put upon the market. The result was, so it has been said, to encourage extravagance in expenditure and to lead Japan to suppose that whenever she wanted money for any purpose she had only to come to Europe and ask for it. The financial experts who so argue, if such puerile assertions can be dignified by the name of argument, talk as if Japan were like a child with a new toy. The Japanese statesmen—in which term I of course include the Mikado, one of the world’s greatest statesmen—are by no means so simple as some of these financial experts would have us believe. Indeed, I will go further, and venture to assert that the statesmen are far more astute than the experts. The former emphatically know what they are about, financially and otherwise, and they are assuredly in no need of any Occidental giving them a lead in the matter. If I desired to adduce any evidence on that head I need only point to the Financial and Economical Annual of Japan, published every year at the Government printing office in Tokio. This exhaustive work deals with the different departments of Government. The section I have before me, which is for the year 1905, treats of the Department of Finance and it certainly serves, and very effectively serves, to show that the Japanese are not, as they so often have been depicted, children in matters of this kind. This Government handbook is not only exhaustive but illuminative. Published in English, everything of which it treats is explained in simple and concise language. There is an entire absence of that official jargon which tends, even if it is not intended, to render Government publications in this country unintelligible to the ordinary reader. The plain man who peruses this Japanese year-book can at least understand it, and he will, among other things, grasp the fact that the Japanese have got the whole question of finance in all its ramifications at their fingers’ ends.
The total National Debt of Japan in 1905 amounted to 994,437,340 yen, or, roughly, £100,000,000 sterling—a sum which the publication I have referred to works out to be at the rate of 19.548 yen, or about 39s. per head of the population. Of the debt some £43,000,000 was incurred to defray a part of the cost of the war with Russia. As an indication of the estimate of the credit of Japan within her own territory as well as abroad, I may record the fact that the Exchequer Bonds which were issued in the country in 1904 and 1905 for the purpose of defraying the extraordinary expenses of the war were largely over-subscribed, the first issue to the extent of 452 per cent., the second 322 per cent., the third 246 per cent., and the fourth 490 per cent.—a record surely! Abroad Japan’s loans were no less successful. The three issues made in Europe during the war were literally rushed for by the investing public, with the result that whereas in May, 1904, Japan offered for subscription a loan of £10,000,000, the issue price being £93 10s. and the rate of interest 6 per cent., in March, 1905, despite the fact of two previous loans and the exhaustion of the country incidental to a long and expensive war, she was able to place on the market a loan of thirty millions at 4½ per cent. interest, the issue price being £90.
A National Debt which amounts to less than £2 per head of the population compares very favourably with that of Great Britain, which totals up to something like £19 per head, leaving out of account the immense and yearly growing indebtedness of our great cities and towns. Furthermore, almost the whole of the National Debt of this country, as of the European Powers generally, has been incurred not only for unproductive, but as a matter of fact for destructive purposes. The vast loans of Europe have been raised for the purpose of waging bloody wars, some at least of which history has pronounced to have been gigantic, not to say wicked, blunders. Much of the National Debt of Japan, on the contrary, has been incurred for useful, productive, and even remunerative purposes—improving the means of transport, constructing railways, &c. The various loans outstanding up to the year 1887, on which Japan was paying very high rates of interest, as much as 9 per cent. on one foreign loan, were in that year converted and consolidated by the issue of a loan bearing interest at the rate of 5 per cent. per annum—a proceeding which materially improved Japan’s financial position and demonstrated that her credit stood high.
The war with China in 1894-5 necessitated fresh borrowing to the amount of over £12,000,000. Subsequent loans were issued in order to extend the railway system of the country and so develop its trade, for such public works as the establishment of a steel foundry, the extension of the telephone system, the introduction of the leaf tobacco monopoly, for the development of Formosa and, another most important matter, the redemption of paper-money. In the early days of her expansion Japan suffered greatly from the evils of inconvertible paper-money and strenuous efforts had for a long time been made by the Government for the redemption of the paper-money and the improvement of the general financial condition. In 1890 it was found that the reserve fund kept in the Treasury for the exchange of paper-money of 1 yen and upwards was insufficient to meet the demand. To meet this emergency, the maximum amount of convertible bank-notes issued by the Bank of Japan against securities was increased from 70,000,000 yen (£7,169,927) to 85,000,000 yen (£8,706,340), of which sum 22,000,000 yen were advanced to the Government without interest. This sum added to the original reserve fund of 10,000,000 yen (£1,024,275) was employed for completing the redemption of paper-money of 1 yen and upward. Subsequent loans for the purposes of the war with Russia I have already referred to. Besides funded Japan has also, like this country, had experience of unfunded debt in the shape of Treasury Bills, temporary loans from the Bank of Japan, &c. Financial operations of this kind are, however, I imagine, necessary for all Governments to meet current expenses. To briefly recapitulate Japan’s indebtedness and borrowings generally up to the end of March, 1905, these amounted to, in all, £140,045,030, of which sum £38,187,369 has from time to time been paid off, leaving a balance of £101,857,661 owing by the nation.