When we consider that for this large, but not unduly large, sum Japan has waged two considerable wars, and raised herself to the position of a great naval and military Power, that she has developed and organised a magnificent Army, provided herself with a strong, efficient, and thoroughly up-to-date Navy, has constructed railways and public works, and generally has placed herself in a capital position to work out her own destiny free from the fear of foreign interference, I altogether fail to see how she can be accused of financial extravagance. There is certainly no extravagance in the administration of her finances. London might, I suggest, learn much from Tokio in this matter. The system of financial check and thorough and rapid audit of public accounts is in Japan as near perfection as anything of the kind can be. Though the late war did produce, as I suppose all wars do, peculation, most of it was discovered and the punishment of the culprits was sharp and decisive. There was no opportunity for financial scandals in the campaign with Russia such as occurred during the South African War. Every country, of course, produces rogues, and war seems, inter alia, to breed roguery on a large scale, but in the Japanese methods of finance the checks are so effective that roguery in the public services has a bad time of it in war as well as in peace.
As I have already remarked, I am of opinion the debt of Japan is by no means excessive, especially in view of the fact that a large part of it has been devoted to purposes which are profitable. The debt works out, as I have shown, at something under £2 per head of the population, and that population is steadily increasing. That Japan is well able to pay the interest on her debt there can be no question whatever, and that when the present debt becomes due for redemption she will be able to raise the necessary funds for that purpose on terms even more favourable than those at which she has hitherto placed her loans I am confident. I must emphasise the fact, since so many persons seem to be oblivious of it, that this is no mushroom South American Republic borrowing money merely for the purpose of spending it on very unproductive and occasionally very doubtful objects, but a Great World Power sensible of its obligations, sensible likewise of the policy and necessity of maintaining the national credit, and confident that the national resources and the patriotism of its people will enable it not only to bear the present financial burdens but even greater, should these be found necessary for the defence of the country or for its development.
The ability of a nation as of an individual to discharge its debts depends of course upon its resources. No man possessing even a perfunctory knowledge of the resources of Japan would surely venture to express alarm at the increase in her debt and scepticism as to her being able to meet the annual interest on that debt as well as the constantly increasing expenses of administration. The resources of the country have, in my opinion, as yet scarcely been realised, and certainly have not been anything like fully developed. And when I use the word resources I do not employ it as it is so often employed in respect of minerals, although the mineral wealth of Japan is considerable. Her resources, as I estimate them, are to be found in her large and rapidly increasing population—a population perhaps the most industrious in the world, persevering, enterprising, methodical, and performing, whatever be its appointed task, that task with all its might as a labour of love, in fact, not as the irksome toil of the worker who is a worker simply because he can be nothing else. It is this great industrial hive which in the near future will supply China and other Eastern countries with all, or nearly all, those articles they now obtain elsewhere. What I may term the European industries of Japan have of recent years been largely developed or evolved. Take, for example, an item, insignificant in one way—that of matches. In 1904 matches to the value of 9,763,860 yen, or, roughly, one million sterling, were exported, and, strange to relate, European clothing to the value of 287,464 yen.
The glib people who talk about Japan biting off more than she can chew, and with a light heart borrowing money she will find a difficulty in repaying, have apparently not grasped the fact that Japan possesses many very eminent financiers who have quite as much, if not more, claim to be considered financial experts than some of those gentlemen who pose in that capacity here in England. The Japanese financiers have, moreover, the advantage of an intimate knowledge of their own country and its potentialities. The Japanese Government has always had the benefit of the advice of these singularly able men, and the result has been that its financial operations of recent years at any rate have invariably been well organised and skilfully and economically effected. I cannot speak too highly of the capacity shown by the Japanese in everything relating to banking. The Banks—of course I refer to the National Banks and not to the European Banks having branches in the country—have very quickly attained a high status in the International Banking world, and are undoubtedly on a very firm financial basis. And there are many great houses in Japan which, although not ostensibly bankers, cannot be left out of consideration in any remarks on this head. They occupy a position somewhat analogous to that of the Rothschilds in this country. Let me take for example the house of Mitsui, the name of which constantly crops up in Japanese finance.
The history of this ancient house has much that is picturesque about it, reminding one of the old merchant princes of Venice. The family originally belonged to the Jujiwara clan, and its origin is traced back to a certain Mitsui who lived as a feudal lord in the fifteenth century. At the time of the fall of the Ashikaja Shogun he lived in a state of perpetual war, and the god of war was not propitious to him. He retired to a neighbouring village and became the overlord of the district. He was succeeded by his son, who removed to Matsusuzaka, where he settled down as a private citizen and man of business, and laid the foundations of the present Mitsui house. In the middle of the sixteenth century his descendant became a merchant. His son moved to Kyoto, where he started a large goods store, which is represented in Tokio to-day by the Mitsui Hofukuten. Subsequently, at the beginning of the seventeenth century, a member of the same house invented and introduced the system of retailing for cash, which was an absolute revolution of business methods at that time in Japan. In addition to that he organised an excellent system for the remittance of money from one part of the country to the other, as also a carrier’s business—two very remarkable facts when one remembers in what a primitive and elementary condition of development the monetary business of Japan was at that period. In the year 1687 the Mitsuis were appointed by the Government purveyors and controllers of the public exchange, and in recognition of the excellent manner in which the duties were performed, they were given the grant of a large estate in Yeddo.
In 1723 the head of the family, carrying out the verbal wishes of his father, assembled his brothers and sisters and then and there drew up in writing a set of family rules which have ever since been practically the articles of association of the house of Mitsui. These rules embodied on business-like lines and in business-like language the principle that the family and not the individual forms the ultimate union in Eastern life. It was not one or the other of the six brothers of which the family consisted when these rules were drawn up that was to trade, but the whole family as one unit. There was to be unlimited liability as far as the property of each one was concerned, and the profits of all were to be divided. This agreement is the identical one under which the great house of Mitsui is run to-day. Under it the family prospered exceedingly, so that when Japan decided to take on some portion of Western civilisation, the Mitsuis acted as the principal financial agents of the Government, and it was mainly owing to the enormous financial resources of the house placed by them at the disposal of the Government that the country was enabled at the period of the revolution to pass successfully through what might have been a most disastrous crisis. As some reward for the great services rendered at the time, the present head of the house was created a peer. Since the opening of Japan to Western influence the business of the Mitsuis has enormously increased, and has been extended in various directions. In 1876 their money exchange business was converted into a Bank on the joint stock system, but with unlimited liability as far as the Mitsui family was concerned. In the same year, for the purpose of engaging in general foreign trade, the Mitsui Bussan Kwiasha was formed, better known in Europe and America as Mitsui & Co. In 1899 the family acquired from the Government the concession of the Meike coal-mines, and there was then formed the Mitsui Kaishan, or Mining Department, which has the management of this mining concession together with many others which have since been acquired.
To-day the house of Mitsui consists of eleven families under a system of joint liability bound together by the old rules drawn up close upon two centuries back. The wealth of the collective families is unquestionably great, and the confidence of the people of Japan in this great financial firm is shown by the immense amount of money it holds on deposit. In one or other branches of their varied businesses they give employment to a very large number of persons. They have initiated an exceedingly interesting system of insurance for their employees. Each is allowed 10 per cent. interest on his wages up to three years on condition of its being deposited in the Mitsui Bank, with the proviso that the sum shall be forfeited in case of the embezzlement of any of the Company’s money. During the late war, as well as in that with China, the Mitsui house had immense transactions with the Government in providing war material, steamers for transport, supplies, &c., and their magnificent organisation enabled them to carry out their various undertakings without the slightest hitch. I may also add that the name of Mitsui headed the various charitable funds which were started in the country in connection with the war. I am sure that this necessarily imperfect sketch of this famous Japanese house will convince my readers of the fact that in finance, as in other respects, Japan has already shown a capacity for holding her own with Western nations.
I have headed this chapter “Japan’s Financial Burdens and Resources,” but I am not quite sure that the word “burdens” is not a misnomer. Japan appears to me—and I may claim to have studied the matter with some little attention—to have no financial burdens, if burdens be taken to mean something that is inconveniently felt, that is difficult to carry. There is here no people weighed down under the crushing incubus of debt. There is a springiness and alertness, a go-ahead energy about the nation—symptoms not usually connected with the carrying of burdens. Japan seems to me to be in somewhat the same position in regard to finance as France was after the close of the war with Germany when the former nation found itself saddled with a tremendous debt incurred for war expenditure and the indemnity which had to be paid to the conquering nation. The fact, however, as we all know, instead of depressing the French people seems to have put the whole country on its mettle, with the result that the heavy interest of the enormous debt was easily met and effective steps taken to reduce the principal. The borrowings of Japan in Europe in the future are likely to be small, because she will be able to obtain what she needs at home, and provided she is not drawn into any war she will find her expanding revenue sufficient not only for the current expenses of administration as well as for the interest on her debt, but over and above all this enabling her year by year to provide a sinking fund which will in due course materially reduce even if it does not entirely extinguish the national indebtedness. In my opinion Japan can look forward to its financial future with equanimity. In regard to its financial past it has the satisfaction of thinking that heavy in one sense though its financial obligations be they have not at any rate been squandered for unworthy purposes.