to their Western competitors. They can deliver sashes, doors, blinds, and woodenware in North and South America at so low a rate that our manufacturers would be driven out of business were it not for the protection afforded by our tariff wall. Though the Japanese do not themselves grow large quantities of cotton, they purchase the poorer and cheaper grades of the raw material in India and Egypt, transport it by their government-subsidized steamers and government-owned railways to their governmentassisted factories, where, as the result of low wages and long hours, it is spun into piece goods which are sold to the cotton-clad millions of the East at prices with which American and British manufacturers are finding profitable competition almost out of the question.

In competing with Western nations for the trade of the Orient, Japan possesses several important advantages. Government control of transportation lines by land and sea, government subsidies and bounties, and, in the trade with Asia, short hauls, are vital factors. The Japanese are so near to the great, rich markets of the Asian mainland that they can fill orders from Eastern Siberia, Korea, Manchuria, and Eastern China before the American manufacturer could get his shipment aboard a vessel at San Francisco or Seattle. Furthermore, it is a cardinal principle of Japanese commercial policy to constantly keep in touch with the changing tastes and fashions

of their Asiatic customers and to give them exactly what they want, which American manufacturers, all too frequently, do not. It must also be kept in mind that the Japanese Government and the Japanese manufacturers work hand in hand in furthering their commercial ambitions. Several of the greatest industrial enterprises in Japan, as I shall show further on, are controlled directly or indirectly by the government, large blocks of stock being held by members of the imperial family and by high officials. Struggling enterprises are frequently assisted by government bounties, and money at low rates of interest is often loaned for the same purpose. The principal Japanese steamship lines are so liberally subsidized by the government, and pay their seamen such low wages, that it is impossible for American-owned vessels, with highly-paid white crews and no government subsidies, to compete with them. As a result, the carrying trade of the Pacific is in Japanese hands. Thus it will be seen that, in their struggle for the trade of the Orient, American firms are not merely competing against Japanese firms. In effect, they are competing against the Japanese Government.

And here is another point which should be emphasized. American business men bear no such relation to their government as Japanese business men bear to theirs. Unlike Japan and Germany, in both of which countries foreign politics and foreign commerce are closely interrelated, the United States does

not utilize the commercial ventures of its citizens to advance its foreign policies. Indeed, beyond giving half-hearted and usually inefficient protection in case of menace to their lives and property, the government at Washington does not concern itself at all with the business interests of its citizens oversea. When an American firm makes a foreign loan, or establishes a bank, or leases harbor or shore rights, or secures a contract, or obtains a concession, every one knows that the venture is without political significance, present or prospective. On the other hand, every move made by Japanese commercial interests abroad has some degree of political significance. If a Japanese firm leases harbor or shore rights in a foreign country, that lease is to all intents and purposes a government one, and may be controlled as such whenever the government chooses. Hence the alarm which was felt by well-informed Americans when it was reported that a Japanese business house was negotiating with the Mexican Government for the lease of a harbor on Magdalena Bay-for they recognized how simple a matter it would be for the Japanese Government to take over that lease and transform an innocent commercial harbor into a coaling station or naval base. Again, the Japanese Government has not hesitated to utilize the concessions held by its subjects in China to coerce the government at Peking. In short, every Japanese merchant who establishes himself abroad automatically becomes a listening-post for the Tokio

Foreign Office, a point d'appui for Japanese aggression, a picket eternally on the alert to serve the political interests of Nippon.1

No one can travel in the Far East without being struck by the bitterness and unanimity with which foreign business men, American and European alike, condemn Japanese business methods. Whether justified or not, this feeling of disapproval and distrust has done more than anything else, save only the racial prejudice to which I have already referred, to embitter the relations between the United States and Japan. Therefore, delicate as the question is, I purpose to discuss it with the utmost frankness. To ignore it in order to avoid offending Japanese susceptibilities would be tantamount to permitting a wound to fester because opening it would cause the patient pain.

I will give the foreigner's side first. Here is the way an American importer, whom I met in Yokohama, expressed himself:

"The Japanese business man has two great faults -conceit and deceit. In his business relations he is overbearing and underdeveloped. In order to make an immediate profit, he will lose a life-long and valuable customer. Though it frequently happens that

A high Japanese official, to whom I submitted the proofs of this chapter for correction, professes to see a parallel to this situation in the Siems-Carey and American International Corporation railway contracts in China. In this I do not agree with him. E. A. P.

he does not understand what the foreign buyer is talking about, his vanity will not permit him to admit his ignorance; instead, he will accept the order and then fill it unsatisfactorily. He will accept an order for anything, whether he can deliver it or not. He would accept an order for the Brooklyn Bridge, f.o.b. next Thursday, Kioto-hoping that something might turn up in the meantime that would enable him to fill it."

An Englishman doing business in Japan said to

me:

"The Japanese has his nerve only on a rising market. As soon as the market shows signs of falling, he hesitates at nothing to get from under. When the silk market rose, hundreds of Japanese firms defaulted on orders which they had already accepted from foreign importers, as they would have lost money at the old prices. When, on the other hand, there was a slump in the money market in the spring of 1920, the customs warehouses at Yokohama and Kobe were piled high with goods ordered from abroad for which the consignees refused to accept delivery."

Another American importer, who has made semiannual buying trips to Japan for more than a quarter of a century and who has a genuine liking for the Japanese, told me, with regret in his tone, that, of all the firms with whom he did business, those upon