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and the branches of these quasi-State Banks abroad are centres for the extension of foreign trade, and bases for that campaign of commercial penetration in China and elsewhere which is gaining for Japan the commercial hegemony of the Far East.
Home industries have been protected and fostered by the imposition of a scientific tariff, which is designed to give the maximum amount of protection to essential industries with the minimum amount of inconvenience to trade in general.
The foreign trade has been assisted by the formation of huge industrial, trading, and banking concerns, such as Mitsui & Co., with a total capital of over 10,000,0007. (in which it is reported that the Imperial Family are interested), and ramifications all over the world. The number of these houses is increasing rapidly, and their facilities for handling foreign trade, whether it be in Japan, China, the Straits, or India, are as great as, if not greater than, those enjoyed by their European rivals.
Japanese commercial attachés and agents abroad are indefatigable in actively furthering the interests of their traders, and in making complete economic surveys of the country in which they operate.
The only handicap under which Japanese trade suffered before the war was shortness of capital. This great drawback is being removed during the last three years of unprecedented prosperity brought about by the war.
The specie reserve, which stood at about 33,000,000l. at the beginning of the war, and had passed 50,000,0007. before the end of 1915, mounted steadily during 1916 to nearly 70,000,000. The expansion of exports overseas together with the great activity of shipping has had a great effect on the balance of trade, has turned the exchanges in favour of the country, and has afforded facilities for the accumulation
specie.
of
According to Government estimates, home investments amounting to over 40,000,000l. were made during the first two years of the war.
Of this sum, 11,713,000. have been devoted to new companies, 21,319,000l. to the increase or extension of existing enterprises, and over 7,000,000l. to debenture and loan accounts. It has been estimated that within a period of six months Japanese merchants had invested in American securities 10,000,000l. of their growing trade balance in the United States.
The national debt of the country has been reduced from 270,000,000t. or 41. per head of population in 1910-11, to 253,000,000. or 31. 6s. per head of population in 1915-16, notwithstanding the fact that the country is confronted with a naval programme entailing an expenditure of 26,000,000, spread over 12 years, and a railway programme calling for large sums for repairs, and also new construction.
Japan will be in an exceedingly strong position to face the commercial struggle which is likely to follow the conclusion of peace. That the Imperial Government recognise the now problems which are likely to arise is proved by the forination of an "Economic Investigation Commission for the examination and consideration of necessary economic measures in connection with the European war. The Commission is divided into five sections to deal with trade, taxation, communications, monetary matters, and industry. Among the subjects already considered and upon which recommendations have been made are:-
(1) The need for "Conditioning Houses" for the principal articles of export, in order to insure that goods shipped are equal to standard, and to dispel the spirit of distrust of Japanese products which prevails abroad as a result of chicanery and lack of commercial morality among certain Japanese merchants in the past.
(2) A scheme of State Reinsurance in order to check the outflow of gold in premia, and in order to prevent information with regard to essential national details being conveyed to the enemy through reinsurance
contracts.
(3) The stimulation of the production within Japanese territories of cotton, wool, flax, jute, paper pulp and lacquer, and the encouragement of the more scientific and extensive use of fertilisers.
SUMMARY OF CONCLUSIONS.
1. Japan has passed from the ranks of the semi-developed markets of the world, into a scientific, developed, highly protected, industrial nation. There is every likeli- hood that British trade with the country in manufactured goods will still increase in the future, but it is certain to develop more and more in the finer qualities of goods
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and in specialities. The greatest openings would appear to be in machinery and plant for the equipment of the new factories of all kinds which are likely to be erected during the next few years.
2. While the foreign trade of Japan has increased at an extraordinarily rapid rate during the past ten years, the position of the British and other merchant houses at Yokohama, Kobe, and the other ports is becoming more difficult each year. This is almost entirely due to the development of direct trading, not only by the large Japanese merchants, such as Mitsui & Co., but also by the dealers in the open ports, who are steadily extending their direct connections with the manufacturers in Europe and America.
3. There do not appear to be any steps which H.M. Government can well take to remedy this state of affairs. British interests are well served by an active and able Commercial Attaché. Financial and other facilities are adequately provided at the ports. The competition is on the whole fair competition, and will have to be inet as best it can. There has been a tendency during the last few years for British firms in Japan to open up branches in China, and this would appear to be a wise move, as it at least widens the channels for distribution and spreads the risk over a wider area.
4. There are signs that the competition of Japan in Far Eastern markets is likely to become increasingly acute particularly in cotton textiles. The war, with the consequent high prices and reduced output in Lancashire has given Japan her opportunity, and Japanese competition is now regarded as a serious menace not only in China, but in India and the minor markets of the Far East. The competition is regarded as serious, not only on account of the quantities exported-although these are on a commercial scale-but also on account of the wide range of goods in which competition is being met.
5. In order to meet this competition, British capital and labour will have to combine to secure the maximum possible output from our operatives and from our machinery, and the fullest and most efficient use of our facilities for transport, finance, and distribution.
I would suggest that a small commission of say seven members should be appointed by the cotton trade to investigate the actual conditions on the spot, and to report and make suggestions as to what steps should be taken by the trade to meet
the situation.
6. Such a commission might, with advantage, consist of :— One spinner interested in the yarn trade to the Far East. One manufacturer with experience of the Indian trade. One manufacturer with experience of the China trade. One merchant with knowledge of the Indian market.
One merchant with knowledge of the China market and also some experience
of the Straits, Java, and Philippines trade.
Two representatives of the operatives.
H.M. Government might give its support by lending the services of an official with knowledge of the commercial conditions existing in the Far East, who could accompany the Commission as its secretary and adviser.
7. Japanese shipping competition is becoming intensely keen on the Pacific, in the Indian trade, and in all the coasting services east of Singapore. The Japanese Government not only foster their shipping by large annual subsidies, but they also close their coasting trade to all foreign vessels. There is a very strong feeling on the part of certain British shipowners that the Indian coasting trade should be similarly reserved for British ships.
8. Japan affords an object lesson of the advantages of co-operation and cohesion among the various components of the economic State. Industry and Foreign Commerce are fostered and scientifically protected by the Government in every possible way. Manufacturers, merchants, bankers, shipping companies, and officials combine under the aegis of the Imperial Government to secure the extension of overseas trade. Private interests are not allowed to clash with and check the interest of the whole body, but a policy advantageous for all is laid down and rigidly carried out. It is this national solidarity and extraordinary efficiency which, combined with low costs of production and distribution, proximity to the markets, and racial and other advantages, renders Japan our most formidable competitor in the Far East.
A 2687
653
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