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COMMERCE] chiefs was carried to Yedo by pack-horses and coolies of the regular postal service. But the costliness of such a method led to the selection in 1691 of 10 exchange agents who were appointed bankers to the Tokugawa government and were required to furnish money within 30 days of the date of an order drawn on them. These agents went by the name of the “ten-men gild.” Subsequently the firm of Mitsui was added, but it enjoyed the special privilege of being allowed 150 days to collect a specified amount. The gild received moneys on account of the Tokugawa or the feudal chiefs at provincial centres, and then made its own arrangements for cashing the cheques drawn upon it by the shōgun or the daimyō in Yedo. If coin happened to be immediately available, it was employed to cash the cheques; otherwise the vouchers of the gild served instead. It was in Osaka, however, that the functions of the exchanges acquired fullest development. That city has exhibited, in all eras, a remarkable aptitude for trade. Its merchants, as already shown, were not only entrusted with the duty of selling the rice and other products of the surrounding fiefs, but also they became depositories of the proceeds, which they paid out on account of the owners in whatever sums the latter desired. Such an evidence of official confidence greatly strengthened their credit, and they received further encouragement from the second Tokugawa shōgun (1605–1623) and from Ishimaru Sadatsugu, governor of the city in 1661. He fostered wholesale transactions, sought to introduce a large element of credit into commerce by instituting a system of credit sales; took measures to promote the circulation of cheques; inaugurated market sales of gold and silver and appointed ten chiefs of exchange who were empowered to oversee the business of money-exchanging in general. These ten received exemption from municipal taxation and were permitted to wear swords. Under them were 22 exchanges forming a gild, whose members agreed to honour one another’s vouchers and mutually to facilitate business. Gradually they elaborated a regular system of banking, so that, in the middle of the 18th century, they issued various descriptions of paper-orders for fixed sums payable at certain places within fixed periods; deposit notes redeemable on the demand of an indicated person or his order; bills of exchange drawn by A upon B in favour of C (a common form for use in monthly or annual settlements); promissory notes to be paid at a future time, or cheques payable at sight, for goods purchased; and storage orders engaging to deliver goods on account of which earnest money had been paid. These last, much employed in transactions relating to rice and sugar, were generally valid for a period of 3 years and 3 months, were signed by a confederation of exchanges or merchants on joint responsibility, and guaranteed the delivery of the indicated merchandise independently of all accidents. They passed current as readily as coin, and advances could always be obtained against them from pawnbrokers.

All these documents, indicating a well-developed system of credit, were duly protected by law, severe penalties being inflicted for any failure to implement the pledges they embodied. The merchants of Yedo and Osaka, working on the system of trusts here described, gradually acquired great wealth and fell into habits of marked luxury. It is recorded that they did not hesitate to pay £5 for the first bonito of the season and £11 for the first egg-fruit. Naturally the spectacle of such extravagance excited popular discontent. Men began to grumble against the so-called “official merchants” who, under government auspices, monopolized every branch of trade; and this feeling grew almost uncontrollable in 1836, when rice rose to an unprecedented price owing to crop failure. Men loudly ascribed that state of affairs to regrating on the part of the wholesale companies, and murmurs similar to those raised at the close of the 19th century in America against the trust system began to reach the ears of the authorities perpetually. The celebrated Fujita Toko of Mito took up the question. He argued that the monopoly system, since it included Osaka, exposed the Yedo market to all the vicissitudes of the former city, which had then lost much of its old prosperity.

Finally, in 1841, the shōgun’s chief minister, Mizuno Echizen-no-Kami, withdrew all trading licences, dissolved the gilds and proclaimed that every person should thenceforth be free to engage in any commerce without let or hindrance. This recklessly drastic measure, vividly illustrating the arbitrariness of feudal officialdom, not only included the commercial gilds, the shipping gilds, the exchange gilds and the land transport gilds, but was also carried to the length of forbidding any company to confine itself to wholesale dealings. The authorities further declared that in times of scarcity wholesale transactions must be abandoned altogether and retail business alone carried on, their purpose being to bring retail and wholesale prices to the same level. The custom of advancing money to fishermen or to producers in the provincial districts was interdicted; even the fuda-sashi might no longer ply their calling, and neither bath-house keepers nor hairdressers were allowed to combine for the purpose of adopting uniform rates of charges. But this ill-judged interference produced evils greater than those it was intended to remedy. The gilds had not really been exacting. Their organization had reduced the cost of distribution, and they had provided facilities of transport which brought produce within quick and cheap reach of central markets.

Ten years’ experience showed that a modified form of the old system would conduce to public interests. The gilds were re-established, licence fees, however, being abolished, and no limit set to the number of firms in a gild. Things remained thus until the beginning of the Meiji era (1867), when the gilds shared the cataclysm that overtook all the country’s old institutions.

Japanese commercial and industrial life presents another feature which seems to suggest special aptitude for combination. In mercantile or manufacturing families, while the eldest son always succeeded to his father’s business, not only the younger sons but also the apprentices and employees, after they had served faithfully for a number of years, expected to be set up as branch houses under the auspices of the principal family, receiving a place of business, a certain amount of capital and the privilege of using the original house-name. Many an old-established firm thus came to have a plexus of branches all serving to extend its business and strengthen its credit, so that the group held a commanding position in the business world. It will be apparent from the above that commercial transactions on a large scale in pre-Meiji days were practically limited to the two great cities of Yedo and Osaka, the people in the provincial fiefs having no direct association with the gild system, confining themselves, for the most part, to domestic industries on a small scale, and not being allowed to extend their business beyond the boundaries of the fief to which they belonged.

Foreign Commerce during the Meiji Era.—If Japan’s industrial development in modern times has been remarkable, the same may be said even more emphatically about the development of her over-sea commerce. This was checked at first not only by the unpopularity attaching to all intercourse with outside nations, but also by embarrassments resulting from the difference between the silver price of gold in Japan and its silver price in Europe, the precious metals being connected in Japan by a ratio of 1 to 8, and in Europe by a ratio of 1 to 15. This latter fact was the cause of a sudden and violent appreciation of values; for the government, seeing the country threatened with loss of all its gold, tried to avert the catastrophe by altering and reducing the weights of the silver coins without altering their denominations, and a corresponding difference exhibited itself, as a matter of course, in the silver quotations of commodities. Another difficulty was the attitude of officialdom. During several centuries Japan’s over-sea trade had been under the control of officialdom, to whose coffers it contributed a substantial revenue. But when the foreign exporter entered the field under the conditions created by the new system, he diverted to his own pocket the handsome profit previously accruing to the government; and since the latter could not easily become reconciled to this loss of revenue, or wean itself from its traditional habit of interference in affairs of foreign commerce, and since the foreigner, on his side, not only desired secrecy in order to prevent competition, but was also tormented by inveterate suspicions of Oriental espionage, not a little friction occurred from time to time. Thus the scanty records of that early epoch suggest that trade was beset with great difficulties, and that the foreigner had to contend against most adverse circumstances, though in truth his gains amounted to 40 or 50%.

The chief staples of the early trade were tea and silk. It happened that just before Japan’s raw silk became available for export, the production of that article in France and Italy had been largely curtailed owing to a novel disease of the silkworm. Thus, when the first bales of Japanese

silk appeared in London, and when it was found to possess qualities entitling it to the highest rank, a keen demand sprang up. Japanese green tea also, differing radically in flavour and bouquet from the black tea of China, appealed quickly to American taste, so that by the year 1907 Japan found herself selling to foreign countries tea to the extent of 1 millions sterling, and raw silk to the extent of 12 millions. This remarkable development is typical of the general history of Japan’s foreign trade in modern times. Omitting the first decade and a half, the statistics for which are imperfect, the volume of the trade grew from 5 millions sterling in 1873—3 shillings per head of the population—to 93 millions in 1907—or 38 shillings per head. It was not a uniform growth. The period of 35 years divides itself conspicuously into two eras: the first, of 15 years (1873–1887), during which the development was from 5 millions to 9.7 millions, a ratio of 1 to 2, approximately; the second, of 20 years (1887–1907), during which the development was from 9.7 millions to 93 millions, a ratio of 1 to 10.