Japanese Commercial Honor


FEW things in the history of modern Japan are better worth noting just now than the curious revulsion of feeling against its people which has prevailed since its recent war, during which the praises of all things Japanese were resounding throughout the Western world. Incidentally, that universal acclaim reveals clearly the one absorbing interest which to-day dominates armed Christendom — proficiency in international slaughter. But in the case of Japan the stirring accounts of her warlike deeds were followed, not merely by a turning away of public attention on the part of the West, but by the rise of a spirit of criticism and detraction so bitter as to call for some explanation. The one which most naturally suggests itself is that overpraise has borne its legitimate fruit, and the Island Empire is suffering from the former ecstasies of its friends. The multiplicity of criticisms, however, the curious feature of the case, would seem to indicate an actual conspiracy to rob the Japanese of their good name.

Some of the charges brought against them may readily be accounted for, especially the chorus raised by returning travelers to the effect that the Japanese had been enormously overrated, and that there was nothing in them to correspond to the panegyrics which had been lavished upon them. It was wholly natural that the average tourist, after feeding upon the sloppy optimism of Sir Edwin Arnold concerning his experience there, should be grievously disillusioned at not finding the angels whom he so rapturously pictured. It is also readily explicable that the army of readers in whom the desire to visit Japan had been aroused by Lafcadio Hearn’s writings, should have returned bitterly disappointed, and consequently full of the spirit of detraction. They made the mistake of forgetting that Hearn was essentially a poet, unusually endowed with the gift of poetic vision. No other writer upon Japan has so clearly or so truthfully delineated the spirit of the land and its people; and because the tourist army could not possibly see what he saw, it becomes absurd for them to class his wonderful prose-poems with the rhapsodies of Sir Edwin.

As to the recrudescence of racial prejudice following the termination of the war, it may be said, that entirely apart from its excitation by the labor element in the Western coast states, it had a distinctly rational basis in the underlying determination of the American people, in view of the one tremendous racial problem now on their hands, not to be confronted with another.

Far less explicable, and in fact only to be accounted for by the existence of an actual conspiracy, recently denounced in the United States Senate, is the persistent recurrence of the newspaper talk about Japanese designs upon America, a charge at which the people of the Empire are amazed, and at which its government stands aghast. Possibly these attempts of the American yellow press to foster strife between the two countries, without either cause or conceivable pretext, would now be abandoned were it generally known, as after nearly a quarter of a century of contact with its people I would unhesitatingly testify, that in Japanese hearts America is by far the most favored nation on earth. They regard it as their mother country, even as we are at last coming to regard England. It is in truth the mother of their modern life. Commodore Perry to-day is enrolled among their national saints, the Fourth of July is observed as one of the chief festivals of the year and the name of George Washington appeals to the youth of the land as does no other name in all history. Wholly inexplicable to all American residents in the country is the ever recurring war-talk in the United States, as evidenced by the fact that invariably they have had to await the arrival of the Western papers in order to get any ‘war’ news. When it is further added that the Japanese government, instead of being the pack of fools which it would be if it cherished any design of attacking America, is not only one of the most level-headed governing bodies in the world, but is intensely aware of the power of our nation and the value of its friendship, it would seem to be high time that this senseless bogey of possible war between the two countries should be given final burial.

Of far more importance, as affecting the interests of both nations, is the impression gaining popular credence throughout the West that in the great race now on for prizes in the world of industry and trade, Japan must be barred out because of the low standard of commercial honor there prevailing, — a standard impossible in a business world based so thoroughly upon a system of credit as is that of the Occident.

In general comment upon this impression, — unfortunately in some of its aspects the best founded of all the prejudices against the nation which have recently come into vogue, — let me say that while I hold no brief for Japan, yet so exaggerated are the reports which have gained ground, and consequently so unjust is the feeling engendered, that there would seem to be great need, without blinking in the least the facts telling against her credit, of a fair and discriminating analysis of the circumstances in her past hisory and modern life which have fastened this evil reputation upon her, and have made her to-day the pariah of the commercial world. For while there are real reasons why she is so regarded, they are not those upon which the existing prejudice is mainly based; the situation is unfortunate enough without the exaggerated and unreasonable accretions which have gathered around it.

To cite an instance of the way in which the case is being put, the question which has been most frequently asked me since my return from the East has been this: ‘Why is it that the Japanese are so dishonest that they cannot even trust themselves, and have to employ Chinamen at the head of all their great business concerns?’ Now upon what does this well-nigh universal impression rest? Its sole source is the sapience of the average tourist, who usually has business relations only with the branches of the three great banks established in the treaty ports. When he cashes his letter of credit he observes the singular fact that the money is being handled by a Chinaman instead of by a native. Here is something worth noting, and the note is at once sent abroad to the effect above mentioned, the simple truth being that these three banks — all of them, by the way, foreign concerns —are the only business houses in the entire empire so conducted; and had our tourist taken the trouble to make inquiry he would have learned that, when Japan was opened and these foreign corporations in China sent their branches into the new field, they sent their Chinese compradores with them. The human mind, always swift to jump at conclusions, has seldom displayed its agility more conspicuously than in this instance.

On much the same foundation of unreason is based the inveterate and universal habit of regarding the frequent reports of mercantile trickery and breaches of trust as evidence of general corruption; whereas in Japan, as everywhere throughout the world, it is only the exceptions to the rule which constitute the pabulum of the press. Only defalcations and thefts and dishonesties are deemed news worthy of mention, while no note is made of the hundreds of millions of dollars changing hands every day without the loss of a single cent.

Yet, while all this can be said, and should be said, in the interest of simple justice, it is nevertheless undeniable that in Japan the ideals of commercial honor and the methods adopted in the conduct of business are not what they are in the West, and there is much of which the Occidental may justly complain. All the more, however, is it worth his while to inquire into the real causes of the mercantile conditions there prevailing, if only to temper the harshness of his judgment. A glance at the unique mercantile history of the Empire may thus be of some use in explanation, though not necessarily in justification, of existing business ways and peculiarities.


The history underlying the popular impression as to the comparative merits of the Chinese and the Japanese is of peculiar interest in this line of explanation, inasmuch as it tells almost the whole story. The fact that in the olden days in Japan the merchant was placed and rigidly held at the bottom of the social scale, and the soldier at the top, while in China exactly the reverse was the case, fully explains why Japan has produced a splendid soldiery, and has wofully suffered in her mercantile life, while the army of China has been the sport of the nations though her merchants have attained a high place in the world of business credit.

This is a difference between the two peoples often noted and commented upon; and particularly unfortunate is it just now for Japan, preëminently a peaceful and industrial nation, ambitious only to gain a standing in the commercial field, to be handicapped by an evil reputation arising from her ancient prejudice against mercantile life. A further glance at her history, however, reveals the fact that her attitude toward the merchant was not a mere prejudice, but a necessity incident to her peculiar isolation.

When, in the beginning of the seventeenth century, the policy of complete seclusion was decided upon, the government was confronted with the problem of furnishing supplies for a large and rapidly growing population,— forbidden to emigrate, forbidden almost without exception to trade with other countries, — on a small group of islands, only one twelfth of whose area was available for cultivation. This problem, it may well be imagined, must have grown more serious every year, especially in view of the profound peace which prevailed for two centuries and a half, thus completely doing away with the check to over-population furnished by the war-waste. The leading and most natural result of this situation was the exaltation of the farming class. The cultivation of the soil was raised to the dignity of a profession, nay, even of a fine art, especially in the provinces directly under the control of the Shogunate. Every effort was made by the government, not only to improve the condition, but also to cultivate the self-respect of the agricultural classes. It was thus that the farmer came to rank next to the Samurai in the social scale, and that his interests came to be so assiduously cherished.

As if to emphasize his importance, the merchant was put below him in rank, and no farmer was even allowed to become a merchant without the consent of the government; the idea being that this was a lowering of his position, and that the dignity of the cultivator of the soil should be preserved. While one result of this policy was the creation of a real, and in many respects an ideal democracy, under theguidance of perhaps the most aristocratic government the world has ever seen, another was the affixing of such a social stigma upon the merchant class that the improvement in its moral status to-day is little less than a marvel.

There is also another item from the economic history of the olden day in Japan which should have weight in tempering the harshness of Western judgment. A common complaint made by tourists is that they are obliged to pay for everything far higher prices than the natives are charged; or, in other words, that because they are foreigners they are being fleeced. But a glance at the social conditions by which the people have been educated would reveal the curious fact that throughout Japan’s long period of isolation it was an accepted principle that the rich must live for the sake of the poor, and prices have always been based upon the purchaser’s rank in society or his presumed ability to pay. This understanding remains largely in force to-day, being fully recognized and acted upon by all favored classes throughout the Empire. The Occidental, coming from lands where the reverse practically holds good, — the poor living for the sake of the rich, — naturally complains of being robbed, as from his point of view he really is; but it is not because he is a foreigner, but because, being a tourist, he is presumably wealthy, and must therefore conform to the custom of the country which permits the poor to levy a tax upon the rich without thereby incurring the slightest imputation of dishonesty.

Much has been written about the transforming ability of the Japanese, and the swiftness with which they have adopted Western ways, but the change in their outward life is a thing easy of accomplishment compared with a revolution in their mental make-up. The influences of centuries of training are not to be overcome in a day, and it is only fair for the West to give the new nation time to adapt itself to business ways almost the reverse of those in which it has been educated.

Untoward as is the situation for a people whose only eager ambition today is to enter the field of the world’s industrial and commercial life, there are several reasons for believing that the handicap under which the nation is laboring will be overcome in a comparatively short time. One reason is that what are called the common people have few superiors in the practice of what is generally termed ‘common honesty.’ The nation, in other words, is sound at the core. House servants, however much they may profit by their ‘squeezes’ or commissions, — a recognized custom of domestic life, — can be trusted without reserve and almost without exception. The same is true of the small tradesman, who, in direct contradiction to the rule which prevails in the West, is more likely to be scrupulously honest than is the wholesale merchant. Making a contract for an article for a specified sum, the workman reported to me, when it was finished, that it had cost him a yen and a half less than he had estimated, and he made the new price accordingly.

In the old days, and the custom still holds, the landlord who evicted a defaulting tenant incurred deep social disgrace, it being universally taken for granted that the latter would surely pay his rent if he could. These may be deemed small matters, but they are facts of common experience among all who have lived in the midst of the people, and they are deeply significant. In spite of all that has been said, and of all that with perfect truth can still be said, of mercantile rascalities as practiced by a large contingent of those who have to do with the foreign merchants of the treaty ports, I cannot repress the conviction that the nation as a whole is sound at the core, and that when its people as a whole are denounced as lacking in moral integrity they are greatly maligned. That the rank and file, in spite of the stigma which for centuries was attached to all engaged in mercantile pursuits, have been able, in any degree, to hold fast to their integrity is a fact of the best possible augury for the moral and commercial future of the Empire.


Another reason for cherishing the hope that the old order of thought in reference to those engaged in mercantile pursuits will sooner or later cease to be operative, and that they will be accorded the social position which their class holds in the West, is the fact that the influence of the all-powerful government is being constantly exerted toward that end. A decided and most significant change has already been wrought by the action of the Emperor in bestowing peerages upon such merchants, business men, and captains of industry as have become prominent in the field of mercantile life, and have proved in that field their efficiency and integrity. It is wholly impossible to compute the strength and importance of this factor in the building of the new nation and in the furtherance of its ambition to enter upon a commercial career, the history of the Empire having shown that all effective reforms or changes in the life of the people have begun at the top. Whatever the Emperor says goes, and is at once accepted as the law. All the radical changes in administrative affairs, which have of late so astonished the world, furnish decided proof of the immense power thus exerted from above,—a power just as certain t o be felt in social life and customs as in matters of state. Even though the ‘cake of custom’ is the hardest to break, its power of resistance has been already materially weakened by this wise policy of the Emperor; and the merchant is no longer the pariah of the realm. The entire press of the land unites with the government in exalting his function as the chief means for the furtherance of the national ambition.

Prominent among those who by the Emperor’s favor have risen from the social dust into places of highest honor is a family whose history is significant, not only as illustrating the value of imperial favor, but also as eminent proof that the heart of the nation is sound at the core, and that business integrity has persisted in spite of the tremendous odds against which it has labored for centuries. The Mitsui family of Japan have been called the Rothschilds of the East; but while the fame of the latter has gone abroad over the world, the Mitsuis have remained practically unknown except to a few Western merchants who have had extensive dealings with the Orient. The European family owes its great renown to the fact that for a century there has been no slightest stain upon its commercial honor. But its career, it should be remembered, has been passed in a world where business itself has been held in honor; while the Mitsuis, engaged in a pursuit utterly contemned by public sentiment, for three centuries, in spite of the demoralizing influence of the social ban, have been trusted by government and people alike, and have kept the honor of their name unstained. Now, thanks to the new spirit animating the nation, they no longer stand so conspicuously alone. Other great commercial families are being ranged with this one, their members not only enrolled among the peers of the realm, but ranking with the merchant princes of the West as exponents of all that is honorable in the conduct of mercantile affairs. To their number are yearly being added many of the Samurai, or knightly chivalry of old, who once scorned all contact with trade, but who are now entering the field of business affairs, determined to bring to the rescue of their country the fine sense of honor in which they were educated under the ancient regime. That they will eventually succeed in their task, backed as they are by the instinct of common honesty pervading the rank and file, there can be no manner of doubt.

In the meantime, however, the West will not only be called upon to exercise patience in dealing witha people brought up upon an entirely different business basis from that which is the standard here, but it will also have to exercise an extraordinary degree of care. So far as business is a game in which the smartest carries off the prize, the Japanese, as a direct result of their peculiar business training, are contestants by no means to be despised. They are a people with so strong a native aptitude for trading that not even the social stigma cast upon the business of money-making, nor the restricted field in which of old it could be carried on, could wholly repress it. Most curious and interesting are the ways in which this aptitude has asserted itself despite the limitations to which it has been subject. The striking of bargains for gain having been made disreputable, trading as a game, or rather as a contest of wits, has always been a popular amusement. Let a foreigner to-day start a dicker with a Japanese shopman, and the constantly increasing throng of bystanders will look on with intense interest, not so much in the hope that their countryman will win, as in curiosity to see which will triumph in the contest of wits, every instance of bargaining having come to be regarded as such. Even therefore while money-making has been under the social ban, the perceptions of a byno-means dull-witted people have been constantly sharpened by it. Now a larger and freer field for the enjoyment of their favorite game, with the added stimulus of personal gain, has been opened to them. If in this field Western tradesmen have expected to find the Japanese mere innocents and children it is more than probable that they have already realized their mistake. The land was indeed fast sealed for centuries, and during those centuries Western business life had far larger opportunities for development; but the Japanese, with their native aptitude for trade, had also in their seclusion a training of their own, and that training has evolved a race of men who in the modern commercial contest of wits will be likely to hold their own.

This basis of trade relations was, perhaps, under the conditions formerly prevailing, not open to so many objections as it now is. The country was then upon a strictly cash basis, as were all the people in their dealings with one another, and therefore little practical harm could ensue from the practice of trade as a contest of wits. But on coming out into a business world based upon credit, the conditions were totally changed. The element of morality lies at the very foundation of a system of credit, and in like measure mere shiftiness or smartness, without reference to moral considerations, is held in stern disfavor. It behooves the Japanese therefore to rid their mercantile operations not only of the social stigma once attaching to them, but also of the peculiar stimulus to dishonest dealing which grew out of the ancient social status. We cannot say, by any means, that the idea of trade as a contest of wits is eliminated from the commercial affairs of the West. Sharpers are here, as everywhere, always in evidence. It is nevertheless, however, true that here the great fabric of commercial life rests upon the foundation of credit, and deep down under that is the popular conviction that honesty is not only the best but the only policy by which credit can be kept alive and operative. It is in this direction that the Samurai spirit of Japan is now moving, and the Samurai are the leaders of the land.