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ments of the Government, and of the great railway, shipping, and other joint-stock companies. In the second class the British merchant in Japan takes little share, preferring, because of the onerous conditions of contract, to leave it to Japanese firms. But the rapidity with which railways are spreading in Japan makes it incumbent upon British merchants to watch their opportunities in this direction. There are now in operation 600 miles of State railways, and 2,300 miles of private lines; besides this, there are nearly 1,000 miles more of private lines in course of construction, and charters for further extensions, amounting to 500 miles, have been granted. According to the Government programme of railway construction within the next 10 years, 26,500,000 yen are to be spent in improving and doubling existing State lines, and within the same period 87,000,000 yen will be paid in constructing new lines extending over 1,220 miles. Private lines will probably grow even more rapidly, for railway companies pay exceedingly well in Japan; the shares of nearly all the companies are at a high premium, and in a country where interest on money rules high, this indicates very profitable working. On the Government lines, the net profit amounts to more than 10 per cent. on the capital, and it may be taken for granted that private lines are more economically worked than these. The Japanese have not the capital for all the remunerative works they would like to undertake, and under existing conditions foreigners may not hold shares in railway companies; but when, in a couple of years, the new treaties come into force, and no distinction is made between natives and foreigners, it may be expected that foreign capital will flow in for railway construction as well as other productive works, and then the demand for railway material of all sorts will increase." The English having introduced railways into Japan, at one time had matters all their own way; but of late the Japanese have taken to manage things for themselves, and there has been a tendency to give orders to America, especially for locomotives. The tendering for Government materials for naval yards, military arsenals, and railways is in the hands of half-a-dozen Japanese firms, but the bulk of the materials is procured in England. But the English makers show less eagerness to secure orders than do their Continental or American rivals. British manufacturers are not so accommodating. For example : arsenal required a crane with the lifting machinery of a certain description, not now considered as the most serviceable. Application was made to an English maker, who refused to supply the out-of-date article. A German maker accepted the order, and thus obtained an opening which he will probably turn to good advantage. Again, the sewing machines of a well-known English maker were in possession of the field, and might have remained there had

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the makers thought it worth their while to humour the fancy of their Japanese customers. For some reason of their own the Japanese wished to have a machine with the arm somewhat higher than it is usually made. The English makers thought that the change would be a disadvantage in working the machine, or at any rate that it was unnecessary. Some German makers did not mind that, they saw that in consulting the Japanese preference there would be an advantage to themselves; and now the German-made sewing machine is seen everywhere." The Report urges that British manufacturers should be specially represented by experts in the principal classes of machinery. It recommends that payment should be secured by Home manufacturers before parting with goods; in some cases the buyer might refuse to take delivery without a substantial reduction on the already agreed price. The Government stimulate the desire of the Japanese so to conduct international trade that the foreign merchant in Japan can be dispensed with; but the Japanese gain more than they lose by employing the foreign intermediary. Reasons are given why the Japanese cannot do direct trade, the chief being that the Japanese merchant has no credit and that no trust can be put in him when it is a question of faithful execution of contracts. Industrial Japan.-Mr. Brenan notes that Japan is fast becoming an industrial country. "In 1872 the whole value of manufactured articles exported by Japan did not amount to $500,000; in 1896 it reached $45,000,000, or 40 per cent. of her total exports. In the earlier year the whole import trade may be said to have been in manufactured articles, now the value of raw materials imported into the country amounts to $46,000,000, or some 30 per cent. of her total imports. It is chiefly in her trade with Asiatic countries that this increasing importation of raw material is noticeable. Speaking generally, Japan's trade with these Asiatic countries may be said to consist of imports of raw materials, and exports of manufactured articles." The increased importation of machinery for several years may be regarded as representing Japan's capacity as a manufacturing country.

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To ensure commercial supremacy in the East is the avowed ambition of Japan's leading men, and to China as a great market to take off Japan's manufactures, present and future, their eyes are eagerly turned. There is in the capital a Government commercial school, which was founded some years ago to qualify young men to engage in trade in Europe and America. One of the leading members of the Council of the school recently delivered a lecture, in the course of which he laid great stress on the insignificant part which Japanese merchants were taking in the trade between China and Japan; and he certainly did not understate the fact, for not only is all the trade between the two countries in Chinese hands, even in Japan, but Chinese are establishing them

selves in positions in Japan which the Japanese had no excuse for allowing them to occupy." The Japanese are not at present qualified to trade in China. Very few speak the language and most of them despise the Chinese. "After all that has been said about Japan's rapid development as a manufacturing country, and her prospects of not only ousting European countries from the Asiatic markets, but even invading us on our own ground, a certain sense of disappointment, or to some it may be a feeling of relief, is experienced when one comes to look a little below the surface. If we take the statistics of Japan's trade, which are prepared in a very systematic manner, we find certainly that her exports to foreign countries have increased enormously in the last few years, but an analysis of these exports show that with the exceptions to be presently noted it is not so much in any new direction that Japan's commerce has increased, but that her staple products are being exported in ever-increasing quantities." In no articles except cotton yarn, cotton textiles, matches, glassware, and umbrellas, has Japan as yet succeeded in competing with the older manufacturing countries in outside markets. The Japanese think they can make everything, but their tendency is to deteriorate in the articles they manufacture. The Japanese have yet to learn that in business honesty pays in the long run. The industries of the country are in a state of transition. Cheapness of labour has been counted on as a factor of importance; but wages are rising very fast; in some trades they are 50 per cent. higher than they were a few years ago. While we need not fear that Japanese wares will drive ours out of the market because of their superiority, we may yet be injured by inferior articles being passed off as "best English make." There is much fictitious commercial and industrial activity in Japan, where bubble enterprises and scheming company promoters exist as elsewhere. Osaka is the chief seat of Japan's industry. "A recent official return states that there are 4,962 factories large and small, and 1,370 factory chimneys. In these are employed 31,400 men and 27,900 women. Besides these, there are 19,000 weaving establishments with over 30,000 handlooms, giving employment to 5,600 men and 40,000 women weavers. Throughout Japan it is computed that there are 600,000 hand-looms, employing 48,000 men and 895,000 women. These looms are engaged in weaving silk, cotton, hemp, and jute. In the article of cotton, the province of Aichi is the greatest weaving district; it turns out 15,000,000 pieces of cotton cloth, the total production of Japan being 30,000,000 pieces. Osaka with its hand-looms supplies only 3,330,000 pieces. It is clear that here is a promising field for the introduction of modern weaving machinery." In cotton spinning, Osaka has made rapid strides. The mills work night and day with double shifts. The hands employed are three or four times as

numerous as in English factories, and their work is comparatively inefficient. But, well or badly managed, the Japanese mills are paying well. The home demand for yarn is gradually increasing; but now that China is herself producing, it is unlikely that Japan will secure the China market. Japan will probably in a short time have more spindles than she can profitably employ. Labour troubles, also, may arise, owing to the short supply of mill hands and the advance in wages. There are as yet no factory laws, and the Japanese takes his work easily. Long hours do not mean uninterrupted toil. Like all Asiatics, the Japanese rebels against assiduous labour. The homespun article has driven Indian yarn out of Japan; but India is supplying Japan with the bulk of the raw cotton she requires. Fine English yarns hold their own, and the demand for English piece-goods is still increasing. "In 1885 the import of cotton piece-goods was 52,179,000 yards, of which 29,239,000 yards were grey shirtings. In 1896 the total import was 110,000,000 yards, out of which grey shirtings figured for 55,000,000 yards. The steam-driven spindle has displaced the hand spinning wheel, and the hands thus set free have been put on to the hand-looms; but they weave not fast enough to supply Japan's increasing demands for cotton textiles. How rapid is this increase may be judged when it is stated that in 1885 62,000,000 lbs. of yarn were woven into cloth; in 1896 the amount was over 200,000,000 lbs. A certain portion of this cloth was exported to China and other parts, but not in nearly sufficient quantities to account for the growing output. The increased consumption is explained by the changing habits of the Japanese, in whom is growing a fondness for luxury and display which the old-fashioned conservatives denounce as a change for the worse." The Japanese are beginning to be a wool-wearing nation (sheep will not live in the country). In 1896 3,650,000 lbs. of wool imported and worked up in mills, which make 12 per cent. of Japan's woollen requirements. In the match trade, where the hand labour is astonishingly rapid, there is over-production; but a limitation of output has been decided upon. A Norwegian Consular Report on this subject says:-"Japanese competition spells bankruptcy. About 50,000 cases of 50 gross of matches have been exported, nine-tenths of which, consisting of phosphoric matches, went to the British Indies. Japanese competition, which was formerly confined exclusively to safety matches, has now become equally serious in connection with the phosphoric article. Japan now exports large quantities to the whole of India. Of the five match factories working for the export trade, one has been compelled to amalgamate its two establishments, another has made very bad business, a third no longer makes safety matches, the fourth has lowered its output, and the fifth has gone bankrupt." Carpet-making has also grown to large proportions, and affords

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an example of the Japanese being able to beat those from whom they learned. Official Aids to Private Enterprise.—There is a disposition to look to the State for special assistance; and on the part of the Government there is a tendency to take in hand and nurse every new enterprise. "The result is an amount of fostering encouragement which may almost be described as coddling. Yet in their haste to develop the commerce of Japan her statesmen frequently appear to lose sight of the main question, and to confine their attention to the personal element. The expansion of international trade is the theme of their discourses, but when their teaching is translated into action it is evident that it is not the volume of commerce alone that is in their thoughts, but also the share of it which is conducted by Japanese agency. The keynote of Government meddling with trade is to be found in the Japanese jealousy of foreign participation in the development of the country. Trade guilds and trusts flourish vigorously, and are used as a means of bending the foreign merchant to their will. "The functions of these associations have extended until they have assumed the character of trusts,' and in their hands foreign importers and exporters are likely to come off badly, for the latter lie entirely at their mercy. As the foreigner's operations are restricted to the Treaty Ports, these well-organized associations stand between them and the native producers and consumers, and foreigners of divers nationalities, far from being able to effect similar combinations in self-defence, play into the hands of these 'trusts' by their keen competition amongst themselves. The influence of these combined associations has now made itself felt in the Diet, and their proceedings are now to have the sanction of the law." Mercantile Marine.-Before the war with China the tonnage of Japanese steamers was 160,000, it is now close upon 400,000. "The principal steamship company in Japan, the Nippon Yusen Kaisha, immediately after the war, decided to largely increase its capital, by raising it from 8,000,000 yen to 22,000,000 yen, and to run a regular line of steamers to Europe, America, India, and Australia; and to this end it gave orders for 18 new steamers, 15 of which are to be of 5,000 tons or over, and the remaining three of 3,000 tons each. When these are delivered the company will be in possession of a fleet of 80 vessels, 50 of which will be over 2,000 tons." So far, each trip to Europe and America has shown a heavy loss. Shipping business is not yet well managed. The Japanese captain has to earn a reputation as a skilful navigator and indiscipline among the crews prevails. Besides the Government dockyards Japan has four private shipbuilding yards, chiefly for small coasting steamers, the parts for which are bought in Europe. Bad management prevails in the yards and steamships will be built in Japan and steamers run

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"only so long as such heavy bounties and subsidies are paid as will make up for the losses caused by unbusinesslike methods and by the unwillingness to accept foreign advice and assistance." State of the National Finances.-Though the cost of the war is more than covered by the Chinese indemnity the outlay to which the country is pledged far surpasses the balance of 100,000,000 yen to the good on that indemnity. In eight years' time, when the programme of naval and military expansion is completed, it is estimated that the ordinary expenditure will have reached the figure of 173,000,000 yen-twice the sum sufficient before the war. Recourse will be had to increased taxation and loans, but at present "it is clear that Japan is living beyond her income." Everything points to a coming period of financial stringency when the burden of taxation must grow more and more heavy if an equilibrium is to be maintained. This cannot but react upon trade, and must also affect the position of the British merchant in Japan, who in two years' time will pass under Japanese jurisdiction, and will have in common with the native to bear his share of the national expenditure." The Island of Formosa.Discussing the question of this new acquisition Mr. Brenan points out that Japanese rule is not yet fully established, that the work of pacification has been attended with much severity, cruelty, and vindictiveness, and it will take years of honest and benign government to undo the effects of this treatment. Further, the Japanese officials are the dupes of their Chinese employés. But notwithstanding the rascalities of these Chinese harpies, the inability of the Japanese to speak the Formosan language, and the misunderstandings between rulers and ruled, the volume of the island's trade has been maintained. Whether British trade will gain or lose by the Japanese ownership of Formosa is a question difficult to answer. Suggested Appointment of a Commercial Secretary.-Mr. Brenan recommends the appointment of a British officer for Japan who shall devote his sole attention to the development of trade. Consuls, he contends, are not in a position to make a systematic study of trade questions; the ordinary staff of H.M. Legation are engaged exclusively in political matters, and there should be attached to that staff, at least as an experiment for five years, an officer whose sole function it would be to promote trade. Besides writing monthly, quarterly, halfyearly, or annual reports, he should prepare special monographs on particular subjects on his own initiative or at the request of Chambers of Commerce in Great Britain. He should make a study of Japanese Commercial Law (in a short period all foreigners will come under the jurisdiction of the Japanese law-courts) and watch the working of the law, and obtain early information of projected public works. Mr. Brenan concludes:-" At present there is somewhere one connecting link wanting between the

manufacturer in England and the consumer in Japan, and while the former is to a large extent represented by the British merchant. in Japan, he is not yet fully so. The merchant in Japan with his native constituents attentively watch the change of markets, and sends home particulars of everything that is likely to find a sale. But these particulars are not necessarily sent to England alone. The merchant in Japan, where he acts for himself, will seek the cheapest market, be it in England, Germany, or the United States, and if he thinks a novelty can be supplied cheaper by either of the latter, he will naturally go there. But even when he sends to his own country it may happen that his indents are not fulfilled. Each merchant in Japan is connected in business with certain manufacturers in England, represents them in Japan, and is bound, as it were, to go to them alone for whatever he requires from England. They may not be willing or able to undertake what he in Japan requires in particular or in special instances, and the result is that the order is entirely dropped or is fulfilled in another country, whereas had full publicity been given to the fact that such and such goods were likely to find a sale in Japan, there might have been a score of manufacturers in England ready to supply them, who under present circumstances never heard of them till it is too late. I cannot entertain any confident hope that a commercial secretary would adequately fill the gap that undoubtedly now exists. As he gained experience he would to some extent, but every possible qualification cannot be found in one single individual. We require a knowledge of the Japanese language, people, and trade history; a trained and acute power of observation, a faculty for logically marshalling facts and recasting voluminous statistics, a readiness of pen, descriptive powers, and some knowledge of law. To all these we can scarcely hope to add expert acquaintance with various branches and staples of trade, but the want of that may be remedied in some degree by observation. Even the best man in these respects will, to a great extent, be found wanting; but such an appointment furnishes the only prospect of even very partially filling the present gap, and the advantage to be gained is worth making the trial."

Tainan and District. Report for 1897, by Mr. Acting-Consul Griffiths.-Exports, £333,148; imports, £279,136-a considerable decrease, owing to the cessation of opium imports. "There are four British and two German firms at present established in this district. During the year one British firm of merchants, with headquarters at Hong Kong, closed its Tainan branch, while one German firm, with headquarters at Tamsui, opened a branch establishment in this district. The year's trade, so far as foreign merchants were concerned, cannot be considered satisfactory.” "As regards

opium, hope is still cherished that 'by way of compensation to the few foreign firms who were engaged in the trade, for the loss of a very lucrative business, the Government may see its way to utilizing them as agents for the import of the drug.' As regards the camphor export trade, the outlook is not bright, and there is little hope of its becoming brighter until something is done to render travelling in the interior of the island of Formosa less dangerous than it is at present. Robberies on the road occur with quite monotonous frequency, native traders are carried off to the hills and held for ransom, and farmhouses and depôts are constantly attacked. This state of affairs, unless soon remedied, must have a serious effect, not only on the camphor trade, but on trade generally in South Formosa, and until the country becomes quieter there can be little prospect of trade developing. No Japanese mercantile firms of any standing have as yet established themselves in this district, but numbers of excellent shops have been opened in the city of Tainan. All kinds of articles are dealt in, the goods, which are of foreign or Japanese make, being imported chiefly from Japan."

Yokohama. Report for 1897, by Mr. Acting Consul-General Forster.-Exports, £9,211,820; imports, £8,987,559-a total trade £3,500,000 in excess of the previous year. Of the total export trade of the port the United States take 52 per cent., France 28 per cent., and Great Britain and the Colonies 14 per cent. Of the imports Great Britain supplies 52 per cent., the United States 13 per cent., Germany 12 per cent., and China 2 per cent. Of last year's total British trade, amounting to £6,047,013, twothirds were with the United Kingdom itself, one-sixth with Hong Kong, and the remaining sixth was distributed between India, Canada, and Australia. Though the total value of the trade with Australia was only £101,000, this was an increase of 33 per cent. on that of the previous year. The imports are mainly lead and wool, but the Customs Returns show that in addition to a considerable export of rice, a steady and increasing demand is springing up for Japanese manufactured articles such as silk piecegoods, floor matting, and fancy goods. The trade with Canada shows a slight increase, due to the larger export of tea. The increased import of raw cotton and sugar is accountable for the increase shown in the value of imports from British India and Hong Kong respectively. The United States are now supplying part of the demand for manufactured iron and pig-iron, and have absorbed the trade in wire nails formerly done with Belgium and Germany. The Report urges the necessity of better business methods by the British manufacturer.

KHORASAN. (See PERSIA.)

KIUKIANG. (See CHINA.)

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Cotton Manufacturing. Report on the Cotton Manufacturing Industry in Mexico, by W. Lionel Carden (Received March, 1898).-This Report contains an exhaustive description of the growth of this industry in Mexico. The conclusion is that the conditions of manufacture are so favourable that it will be very hard, if not impossible, for English cottons to compete with the local industry. "The price of the raw material, except for the import duty, which is not quite 1d. per lb., is practically the same as in England; although fuel is dear, the gross expenditure under this head is not large, owing to the extensive use of water for motive-power; taxation is light; and, finally, labour, which, though not of a high order, is good enough for the manufacture of the class of goods for which there is the largest demand in Mexico, is extremely cheap. Under these circumstances it is only because the output of the Mexican factories has never yet been sufficient to supply the local demand that it has been possible to continue the importation of low grade English piece-goods into this market; but there are strong grounds for believing that this state of things will not last long. The normal increase of consumption of cotton piece-goods does not exceed 3,000,000 square mètres, or 150,000 pieces per annum. As against this, the increase of manufacturing capacity in 1897 over that of 1896 was about 500 looms, representing a minimum output of 300,000 pieces, while the new factories which are now in course of erection, and will be in working before the end of 1898, will have 1,200 new looms, giving an output of nearly 750,000 pieces. At this rate, therefore, it cannot be long before the Mexican factories will be in a position to produce all the plain and coloured cotton goods of ordinary qualities required for home consumption. It is useless to attempt to disguise the fact that this will be a severe blow to English trade, as more than half the value of the English goods exported to Mexico consists of cheap cloth, which must eventually be excluded from this market. English manufacturers, however, should bear in mind that the capacity of the ordinary Mexican operative is limited, and that, in order to produce goods of superior fineness or of a variety of textures, skilled labour, usually foreign, has to be employed, which, while often unsatisfactory, is always expensive, and adds very materially to the cost of production. In

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Bushire and District. Report for 1897, by Lt.-Col. Meade, Consul-General.-Trade to and from the Persian Gulf showed an improvement on that of 1896 of an increase of £457,725 in imports and £15,277 in exports. "The new German firm alluded to in last year's Report, which trades under the name of Deutsch-Persische Handels-Gesellschaft, continued its operations at Bushire throughout the year, besides starting agencies at Shiraz, and in one or two of the lesser ports in the Persian Gulf. Many merchants and manufacturers in Germany and Belgium have commenced soliciting orders from the Persian traders, and their eagerness to afford facilities will probably sooner or later open up fresh lines of commerce, though, for the year under report, the competition thus offered has not been seriously felt by the old established firms here. The deputation of Dr. Hauck, formerly of the German Legation at Teheran, as Consul in Bushire, to initiate a German Vice-Consulate here, is significant of the endeavours which Germany has lately begun to make all over the world to expand her trade. I would invite special attention to this matter, as it is certain to affect British trade ere long, and efforts should be made to maintain our present supremacy." The importation of arms was stopped by the Persian Government in December, but the importation for the eleven months shows an increase in the value of the previous year's imports by £12,500.

Khorasan. Report for 1896-1897, by Consul-General Yate.-The foreign trade

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