—'Let us assume that the feudal system had already been abolished,' said another, 'the winding-up of the affairs of the different feudal governments, and the consolidation under a uniform system of central government must have been a very difficult and delicate matter.'
—'Yes, it was so,' I answered. 'To begin with, most of those governments had debts of all kinds which had to be liquidated, above all, their obligations for paper money floated by them. The coinage of gold and silver was the monopoly of the central government, but all the feudal lords had the privilege of circulating paper money under different forms in different clans. The actual value of this paper money in gold and silver varied according to the financial condition of the feudal government by whom it was issued, and that money was legal only in the districts which were under the jurisdiction of the lords by whose governments they were issued. You can therefore easily imagine how troublesome and inconvenient the matter must have been to travellers and traders in localities where those feudal governments stood in close proximity to each other. Then again, the lords and their retainers could not be made penniless immediately on the abolition of the feudal system. To them, therefore, certain means of support were given, in proportion to their former rank and income; that support was ultimately converted into the form of government bonds. The income thus given was not enough for many of the Samurai to support themselves and their families, and they, therefore, had to seek some new occupation to which they were not accustomed. A large number of them even lost the bonds thus given, through their incautious or incompetent management. The government had to prevent things getting into a worse condition, and to make the transition state a smooth one, if possible. For that purpose the government often had to organise for them some kind of common work, for which sometimes some special funds were given. Somehow or other, we have got through those trying times. The credit of winding-up the affairs of the feudal governments is chiefly due to Count Inouyé, who was the acting Minister of Finance at the time.
—'How did matters stand at the time with regard to the system of taxation?' asked one.
—'It was also one of the most difficult problems which the Imperial government had to solve,' I answered. 'Perhaps you know that the economical theory of the Far East had always been essentially physiocratic. Agriculture was the foundation of national existence. Commerce and industry were very little considered. Curiously enough, on that account the land had to bear public expenses almost entirely, and commerce and industry contributed almost nothing; in other words, taxes on land were the main source of public revenue. People engaged in industry and commerce paid no tax, except perhaps some trifling amount in the form of licences occasionally, and except that they were often ordered by their lords to contribute irregular sums of money to relieve their financial difficulty. The land taxes were paid, as a rule, in kind, namely, rice, but the burden of the tax-payers was by no means uniform throughout the country. There was a vague measurement expressed by the words "four public, six private," that is to say, four tenth parts of the produce was to go to the government, and the remaining six, together with any supplementary produce, was to remain in the hands of the producers. But this was by no means uniformly practised. Roughly speaking, the burden of the lands under the direct control of the Shogunate was lighter than that on the lands under the different lords. But there was much difference in the burden on the lands held by the different lords. As a matter of fact, all sorts of additional burdens, besides the pure land taxes, were instituted and levied on most lands. It was necessary for the Imperial government to unify these burdens and equalise them, as much as possible, throughout the whole country. It was also desirable to change the whole system of paying taxes in kind into a uniform system of money payment, because, in the case of the former, revenue is subject to variation on account of the condition of the harvest and the market price, besides, that system is more liable to abuse. The Imperial government undertook this tremendous work of reform. The valuation of all lands was carried out, and the system of payment in money was effected. I may here mention that, under the ancient Imperial régime, no proprietary rights were recognised in lands. The tillers of land obtained the allotments of them for life, and new allotments were made from time to time. That system, however, was not strictly enforced in the case of newly reclaimed lands, especially so in the far-off provinces. As time went on, the system entirely fell through, and hereditary proprietorship of the tillers came tacitly into existence. Nevertheless, the idea of the supreme domain of the sovereign from the points of public law and proprietary rights of the possessors from points of private law had not been brought into a very distinct light, and the vague notion had still remained that the possessors held the lands only by favour of the sovereign. As a matter of fact, in most parts of the country no rights of sale of lands were legally recognised, though the matter was widely affected by some fictitious means, such as long mortgages or long leases. This state of things was entirely changed by the reform made when the nature of the land tax was changed, as I have just described, because by that reform the full proprietary rights from the point of private law were completely recognised. I said that industrial and commercial people contributed almost nothing to the public expenses, and yet the denominations under which they had to pay something were various. Add to this numerous other miscellaneous contributions; there were several hundred different kinds of contributions, but each of these separately amounted to a very small sum, and was not worth the trouble it involved. These, therefore, were altogether abolished. Of course the government had, as time went on, to introduce some new taxes, such as the business tax, the income tax, etc., but these are the results of the progress made in our economical and financial conditions, and based on broader and more universal lines, so as to fit the altered state of the country. The annual budget, which amounted to seventy or eighty million yen before the Sino-Japanese war, amounted to some five or six hundred million yen before the Russo-Japanese war: that will perhaps show the expansion of the financial system of the country.'
—'It is very interesting,' said one; 'but let us have a cup of tea, and then continue the discussion.'
VIII
Commerce and industry—Old methods of communication—Roads and ships—How they have been improved—Railways, post, telegraphs, and telephones—Progress of the financial system—The Satsuma war—The Bank of Japan—The National banks—The monetary system one of the causes of Japan's success—Further remarks on the military reforms—Evolution of the mode of fighting—All reforms at much cost of blood and money—The cause of the Satsuma war—Saigo the Elder—Social condition of Japan to-day—Evolution of legislation—Chinese jurisprudence—The Japanese are not good correspondents—My future—An operatic singer—Japanese stages—Danjiuro and Irving—The old school and the new one—Kawakami and Sada Yakko—The opera Maritana—The end of the dream
I was still in the same incongruous group of people, and carrying on a conversation on the same lines. Though the subjects were rather technical, they seemed to have interested the people who took part in the discussion, because they relate to the important part of our history, wherein the foundation-stone, so to say, of Modern Japan was laid.
—'I suppose, 'said one of the group, 'your country had to take much pains in encouraging commerce and industry to attain the stage you have reached.'