What of China and Japan?

Front matter

What of

CHINA and

JAPAN

CHAPTER I The Form of Government in Japan

American business men are beginning to take a very great interest in all foreign trade matters and the members of the Illinois Chamber of Commerce may consequently be interested in a general review of the present political and business conditions in the Far East.

First of all, it is perhaps quite important that consideration be given to the form of government in Japan which seems to be very much like the German form of government before the war.

The Mikado

The Mikado is supposed to be a direct descendent of the Gods, and the people of Japan believe that he is divine. Pictures of the Mikado are in all of the houses, and a majority of the people bow down before these pictures. The important religions are Shintoism and Buddhism and both teach the divinity of the Mikado. The people have been taught for generations to be loyal to the Mikado, and there is probably no country on earth in which the people are so solidly loyal to their ruler and their government.

The Mikado exercises the supreme power, and his will is practically law. However he is advised in important matters by the Privy Council.

The Privy Council and Elder Statesmen

The Privy Council consists of thirty-nine members, and its functions are purely advisory. This Privy Council is of course hand-picked, and it represents the ruling classes, and the vested interests, together with the militarists. Inside of this Privy Council there developed a clique of seven men, called the Elder Statesmen, only three of whom are now active. These Elder Statesmen actually run Japan. Their appointment is not provided for in any of the laws of Japan, but nevertheless they are the real power and the Mikado and everybody else usually follows their recommendations. They are militarists and they control the army and navy. They sometimes use their influence against the Cabinet and Diet much the same as the militarists used to do in Germany.

The Cabinet

The Cabinet is provided for in the constitution and the direction of the country’s affairs is supposed to be largely in its hands. However the Prime

Minister is usually recommended by the Elder Statesmen, and after appointment, he forms the Cabinet. The Cabinet is not responsible to the Diet but is responsible to the Mikado, just the same as the German Cabinet used to be responsible to the Kaiser.

The Diet

The Diet consists of two houses — a House of Peers and a House of Representatives. The Diet has power to pass laws but these laws do not go into effect unless and until they are approved and promulgated by the Mikado. Under certain circumstances the Mikado can proclaim laws without consulting the Diet.

The House of Peers is composed of members of the royal family and nobility, representatives of the army and navy and a number of manufacturers, financiers and business men representing the largest tax payers.

The House of Representatives is elected by the people, but only those male Japanese at least twenty-five years of age who pay a direct tax of ten yen ($5.00) can vote. As the people are poor there are not very many men who pay this tax, and consequently o'Jt of a total population of some seventy millions in Japan and its dependencies less than three million can vote. Furthermore many of these are prevented from voting by bribery, and dishonest election methods are said to be quite customary.

A writer has recently said that “the model of administration is not the British Parliament or the American Congress but the United States Steel Corporation, and the Standard Oil Co.” Japan is apparently owned and run by less than two hundred thousand men, consisting of the rulers, the militarists and “the interests.”

The people seem to be pretty well satisfied with this form of government and at the present time it would seem that a monarchy is better suited to the needs of oriental peoples than a republic. However there is a considerable liberal movement in the country and the advocates of real constitutional government will some day overcome the Elder Statesmen and the militarists. The struggle between these two forces is similiar to the struggle that went on in Germany before the war.

In international affairs the Japanese form of government gives to Japan the same very great advantages that the old German form of government gave to Germany. Japan is able to adopt international policies promptly and secretly and to strike swiftly and effectively.

CHAPTER II The Expansion of Japan

JAPAN has a very large population and the Japanese Islands do not furnish sufficient roomi for all these people, particularly as the population is increasing at the rate of about 700,000 per year. Between five and six million farmers cultivate the land but their average farms are less than three acres in size and it is necessary for each farmer’s family to carry on some form of home industry in order to make both ends meet. Furthermore, industrial conditions are very bad and the wages paid are very small so that the masses of the people are very poor and the scale of living is of course very low.

Japan, like Germany, felt that the best way to take care of her increasing population was to expand her territory and send colonists out of Japan. She felt that the expansion of territory was particularly necessary because her colonists were not welcome in the United States, Canada and Australia.

After Japan had expanded her territory somewhat in the north and in the south she learned that her people did not care to colonize land located in a cold climate or in the tropics. The Japanese thrive best in a warm, temperate climate and consequently the rulers of Japan changed their plans somewhat and decided that their increasing population should be supported by the development of industrialism the same as had been done in England. Japan has consequently continued to expand her territory with the idea of merely governing her dependencies, obtaining raw materials therefrom and developing trade therein. Under this plan officials, traders, business men and a comparatively small number of colonists have gone into the countries that have been taken over by Japan, and have developed a demand for Japanese goods that has made possible the more rapid growth of industry at home.

The Chinese War

For many years Japan and China both endeavored to control Korea, and finally in 1895 Japan picked a quarrel with China and declared war. This war was a short one because Japan was thoroughly prepared and China was not. As a result of the war the influence of Japan was recognized in Korea, the island of Formosa was ceded to her and she was given territory at Port Arthur in southern Manchuria. Russia, France and Germany protested against Japan receiving Port Arthur as they said it would threaten Chinese independence and might disturb the peace of the Far East. As a consequence Japan was compelled to give up Port Arthur.

European Expansion

Within a short time Japan was astonished to receive word that Russia had decided to take possession of Port Arthur herself and at about the same time Germany took possession of territory in Shantung province, France extended her holdings in the south of China and Great Britain joined in the game and added to her various holdings of Chinese territory.

Japan promptly decided that the only way to be respected in the world was to possess warships and armament and she immediately began to equip herself from a military standpoint.

The Russian War

After a few years Russia began to try to push Japanese influence out of Korea and finally in 1905 Japan declared war against Russia and to the surprise of the world the Japanese were everywhere triumphant on both land and sea.

As a result of the war Japan’s influence over Korea was conceded and she also got Port Arthur and took over Russian interests in southern Manchuria and eastern Mongolia.

Japan was particularly interested in getting a foothold in Manchuria for here could be found both iron and coal and Japan was in need of both iron and coal in order that she might become a great industrial nation. Furthermore Manchuria and hlongolia contain many other valuable raw materials and the opportunities for Japanese colonization in these two provinces are very fairly good. While these two provinces are still supposed to belong to China, nevertheless the Japanese control them to a very large extent and Chinese sovereignty is fast becoming a fiction.

After the Russian war Japan repeatedly stated that she would respect the independence of Korea although insisting that her influence in that country must be respected by other countries. Flowever, Japan gradually took over the government of Korea and finally annexed the country. Many Europeans and Americans protested against this annexation, but Japan claims that she only did what England has done in Egypt and what many other European countries have done in various parts of the world.

Japan has made great improvements in Korea but she has nevertheless proved herself to be a poor colonizer, because she has never won over the people of Korea who are still sullen and watchful for an opportunity to regain their independence.

Siberia

During the world war the Allies and the Japanese sent an expedition into Siberia. The Allies finally withdrew their soldiers from the country but the Japanese are still there and it looks as though they may intend to endeavor to permanently extend their influence over all of Siberia as far west as Lake Baikal but such an arrangement might very possibly bring about a future second Russian- Japanese war.

Encroachment on China

Since China became a Republic her government has been more chaotic than when she was a Monarchy, and constant changes in the administration have taken place. The Japanese have been fully alive to the situation and it is claimed that their influence over the Peking government is very great.

Certain it is that their traders and business men have been spreading all over China and that they maintain Japanese garrisons in many Chinese cities.

The Japanese of course control the Shantung peninsula which they took away from Germany and they have also declared a sphere of influence over Fukien province which is opposite the island of Formosa.

Many Japanese business men believe that in the future raw materials will come from Manchuria, Mongolia and Siberia, will be manufactured in the factories of Japan, and will be sold in the markets of China. It is hoped by these Japanese that Japan will own the sources of raw materials and that her influence in China will be so supreme as to give her something of a monopoly in the Chinese markets.

Acquisition of Islands

Ever since Japan became a modern nation she has been acquiring from time to time, various islands scattered up and down the coast of the mainland of Asia until at the present time she owns a chain of islands extending from Kamchatka to the Philippine Islands. It is only necessary to study a map to realize the strategic strength of Japan’s position all along the coast of Asia. Recently Japan has extended her island possessions toward the south by taking over from the Germans the Caroline Islands and the Marshall Islands and various other German islands located north of the Equator. These new possessions include the Island of Yap where the much discussed cable station is located.

The Open Door

For many years the United States has stood for the “Open Door” in China and Manchuria and all of the nations interested in the Far East have consistently supported this policy in theory. However in practice the “Open Door” is a fiction in most of Manchuria and various parts of China. Before the war China was pretty well covered by the spheres of influence of Russia, Japan, Germany, Great Britain and France. Japan has now superceded Germany and has at least temporarily superceded Russia. The influence of Japan in China has gained enormously as a result of the war while the influence of Great Britain and France has suffered in some ways. The tendencies of the last few years would seem to point toward the closing of the “Open Door” and the monopolizing of the Chinese markets by a few powerful nations among which the United States would be conspicuous because of its absence.

A recent attempt to assure the inclusion of United States business men in the development of China has been made through the participation of American financiers in an international financial Consortium which has been planning to extend necessary loans to China for the development of the country.

This financial participation by Americans cannot but be advantageous to our interests, but nevertheless many people in the Orient feel that the “Open Door” will soon disappear except in theory unless new international agreements are made concerning the whole Far Eastern situation.

The whole question of the Far East will come up for discussion at the International Conference called by President Harding, and it is consequently very important that American business men familiarize themselves with Far Eastern conditions.

CHAPTER III War On the Pacific

The question is constantly asked all around the Pacific Ocean as to whether the United States and Japan will eventually fight a great war. The United States feels aggrieved because Japan is apparently closing the “Open Door” and Japan feels that she has several grievances against the United States.

California and the Japanese

Japan has strongly protested on various occasions against the laws of California which have discriminated against the Japanese and have made difficult their ownership of land in California. These laws provide that land cannot be held in California by any alien who is not entitled to become naturalized under our laws. As our laws provide that only white men and negroes can become naturalized the Japanese are of course barred from the ownership of land and the Japanese government considers that this is racial discrimination. They point out the fact that Turks, Mexicans, Hottentots and Zulus can own land under our laws but the Japanese are disqualified because they belong to the yellow race.

The Japanese cannot object to laws that bar all outsiders from owning land for they have passed laws that prohibit the ownership of land outside of their treaty ports by any aliens. However Japan objects to the discriminatory nature of our laws and has consistently demanded the recognition of racial equality.

At the coming International Conference to be held in Washington the question of racial equality will undoubtedly be brought up and it might do no harm and might on the other hand do considerable good for us to admit the ipolitical equality of the white and yellow races, but such a declaration by us should clearly point out the fact that our e.xclusion laws and land laws are made necessary by economic and not racial considerations and therefore could not be affected by our admission of political racial equality. Japan caimot logically object to this position for she herself, for economic reasons, bars out Korean and Chinese coolies although they surely enjoy racial equality with the Japanese.

As a matter of principle it would of course be wise for us in America to endeavor to frame exclusion laws and land laws so that they will be general in their scope instead lof being apparently aimed against any one race or nation.

While the California grievances have been played up very strongly in Japan and while Japan is of course intensely interested in seeing that her people obtain the best possible treatment in America, nevertheless many shrewd men feel that Japan has used very good diplomatic strategy in keeping our attention riveted on California while she was making her great advance in Manchuria, Mongolia and China.

Opposition to Expansion

The Japanese feel that the United States has always opposed Japanese expansion on the main land of Asia or in any other direction. They point to their need of expansion and call attention to the fact that the United States has not seriously objected to the expansion of European nations in Asia and in Africa. They furthermore cite the fact that the United States has done considerable expanding herself and is still extending her domain around the Caribbean Sea.

The Japanese feel that the Americans have given considerable encouragement to the Koreans in their agitation for independence from Japan and everybody in America knows how Japan feels about our opposition to Japanese control of Shantung and our position concerning Japanese possession of the Island of Yap.

Trade Rivalry

Japan feels that because of her geographical position she is entitled to dominate the trade of eastern Asia and as her business men and traders come into competition with Americans who are interested in trade with this part of the world there naturally results numerous causes for friction and bad feeling.

It is interesting to note that many Japanese feel that they are entitled to exclusive rights on the main land of Asia and there is considerable talk of a proposed Japanese policy to be known as “Asia for the Asiatics.” This proposed policy is said to be justified by our Monroe Doctrine but upon examination the two policies are found to be entirely different. Under our Monroe Doctrine we do not keep garrisons permanently in South America nor do we interfere with the internal affairs of the countries south of us nor do we take any steps to monopolize their trade to the disadvantage of other nations. All of these things are being done by Japan in China and it is proposed to justify this policy by giving it the attractive title of “Asia for the Asiatics.” If Japan would declare a real Monroe Doctrine and would then carry out this doctrine as we carry out our Monroe Doctrine the United States could not logic&lly object because we have consistently stood for the integrity of China and equal opportunity of all nations to trade with that country.

Difficulties of Warfare

Should disagreements between the United States and Japan grow to a point where warfare was seriously considered it is certain that both countries would realize the difficulties of waging warfare with a nation so far away. It is true that the Philippines are at present a very weak point and could easily be taken by Japan but any idea that the Japanese could send an army across the Pacific and invade the United States is nonsense. Furthermore any idea that we could send an army of invasion to Japan is also nonsense. The Japanese would probably take the Philippines and then wait for us to come and take them back. We would probably not be so foolish as to try to take them back but would have our navy interfere as much as possible with Japanese trade and overseas interests. However in these days of new military and naval inventions it is of course impossible to guess as to how such a war would be conducted, but it is certain that the intervening distance between the two nations would make warfare difficult and would consequently constitute a strong reason for the maintenance of peace.

Financial Losses of a War

The financial losses of a war would of course be serious for the United States but would be disastrous for Japan. We are Japan’s best customer and it would bring bankruptcy to many lines of business if Japan were to fight her best customer. Furthermore she buys from us great quantities of essential raw materials without which a great part of her industry would suffer a considerable collapse.

The financing of such a war would seem to be entirely beyond the power of a people who are already very heavily taxed and who are living largely from hand to mouth. Before the world war it was suggested that either Germany or Russia might finance a war against the United States by the purchase of Japanese bonds but the conditions are now completely changed and the only market in the world where large issues of government obligations can be absorbed is in the United States. Then, too, the fact should not be lost sight of that in a war between the United States and Japan the interests of Canada and Australia would be just the same as the interests of the United States, and this situation would insure the support of Great Britain during the contest. Japan is unpopular in China and is constantly having trouble with the natives of Korea, and it is consequently permissible for us to presume that the influences of the mainland of Asia would be on our side.

No War in the Near Future

After studying the situation in the Far East it woifld indeed seem very unlikely that there will be any war between the United States and Japan until the passing years have brought great changes in fundamental conditions in this part of the world. We should however always keep in mind the fact that Japan is controlled by a military clique much the same as was Germany and that this clique is not responsible to the people but is nevertheless all powerful. If these men should so far lose their heads as to believe that a great war would be to the ultimate advantage of Japan, international trouble might very possibly ensue.

It would seem as though the United States should not be overawed by the thoroughly advertised military genius of the Japanese, remembering that while they have a great army and an efficient navy, they have nevertheless fought but two wars in modern times, one against the unprepared Chinese and the other against the corrupt and poorly led Russian forces operating many thousands of miles from home. The policy of the United States in the Far East should be strong, but on the other hand it should be carefully based on policies that are absolutely fair to Japan and every effort should be made for disarmament and mutual understanding for on good feeling and agreement between these two great countries the peace of the world largely depends.

CHAPTER IV The Western Side of the Pacific

A MAP of the Western Side of the Pacific Ocean shows Siberia at the north, then Manchuria and Korea, after which comes the Republic of China. South of China are the Philippine Islands, Borneo, Celebes and New Guinea and farther to the south are Australia and New Zealand. The affairs of all of these countries are interwoven in the Far Eastern question and it may be of interest to note what parts of these great stretches of territory are of particular interest to the United States.

First of all it must be admitted that the future development and trade of Siberia is of some interest to us but Siberia has been looked upon as the permanent possession of Russia and we have consequently never felt that we possessed any vital interests in the country. If there is to be a change in the status of Siberia we are of course anxious to see that our business men receive fair treatment in that great section of Asia but nevertheless we cannot expect that there will be a trade of great magnitude with Siberia for a considerable number of years to come.

Korea is now a part of Japan, and Manchuria, including eastern Mongolia, is already generally acknowledged to be under the domination of the Japanese. In these countries we could develop a large trade, but their political biWiation with Japan is now; so close that we cannot expect to obtain more than a small part of the business originating there.

The Republic of China constitutes a vast land of opportunity for Americans for here must be carried on enormous development works and a tremendous volume of trade. Japan is already endeavoring to control the north of China including Shantung province. Great Britain has spread her influence over the central part of the nation and also over various harbors up and down the coast. Farther to the south Japan has declared a sphere of influence over Fukien province. Great Britian has her holdings at Hong Kong, and the extreme southern part of the Republic is dominated by France.

The Philippine Islands are owned by the United States, and Borneo, Celebes and New Guinea are owned by Holland and Great Britain. Australia and New Zealand are parts of the British Empire and we could of course expect no great changes in our trade relations with those countries, which relations, by the way, are quite satisfactory.

As we look up and down the western side of the Pacific we must realize that China is the country of importance for us. Erom our standpoint it might almost be said that under present conditions China is the only part of the western side of the Pacific worth seriously squabbling about.

Future American Policy

If some satisfactory arrangement can be worked out in Washington so that the integrity of the eighteen provinces of China can be maintained and orderly government developed and equal business opportunities extended to all nationalities it might be advisable to frankly recognize the need for Japanese expansion in Manchuria and eastern Mongolia, provided however, that the foolish armament race between the nations can be terminated and disarmament be gradually brought about. Under such conditions peace and good will should prevail in the Far East, and undreamed of development should take place in that part of the world during the next generation, in which development the United States would take a very considerable and a very helpful part.

If the Washington Conference does not work out a satisfactory arrangement in connection with the Far Eastern situation, then the United States must make up its mind to do one of two things, either to withdraw entirely from any large participation in Chinese affairs and leave the country to the tender mercies of those nations that are already on the ground, or else continue to strengthen our naval policy, adopt a strong position and be prepared if necessary to make a show of force.

The Philippines

If the old competitive spirit backed up by force is to continue to prevail and if the United States were to decide to withdraw from any serious participation in the resulting contest, the Philippine Islands would doubtless prove to be a considerable burden to us, and the sale of these Islands to Great Britain, France or Holland, all of which countries have possessions near them, would seem to be advantageous from our standpoint, particularly if we were able to arrange for an exchange of the British, French and Dutch possessions in and around the Caribbean Sea. If on the other hand we were to decide that our enormous economic strength and our ability to maintain a great navy justified us in joining in the scramble, then the Philippine Islands might prove to be a very valuable possession, located as they are at about the center of the western side of the Pacific. However it would be necessary for us to strongly fortify the Philippines and maintain a great naval base at Guam.

Congress has promised independence to the Philippines, but nobody in the East believes that they can be given independence for many years to come. There are over three thousand islands in the Philippine group, inhabited by some ten million natives belonging to many races and speaking many different languages. Of course very few of these natives are in any way educated and it is hard to understand how such a mixed mass of backward people can safely be given their independence. Well informed people believe that Philippine independence would merely result in the exploitation of the natives by the small but shrewd political group that already completely dominates the local politics of the Islands, and it is believed that in the end Japan or some other nation would find an excuse for taking the Islands over.

CHAPTER V Business Conditions in Japan

Business men in japan have recently experienced the same ups and downs in business as have Americans. During the war, and for some time following the armistice, Japan did an enormous export business, and large amounts of gold were consequently, acquired. This gold served as a basis for great inflation, bank loans were increased, the circulating note issue was enlarged and, of course, costs, wages and prices all went rapidly up.

The Panic of 1920

In the early spring of 1920 the banks realized that prices had risen to a point beyond all reason and they began to feel that any sudden shrinkage in values would greatly embarrass many of their customers. Furthermore they found that they had extended about all of the credit that it was possible to extend and consequently they began to exercise great care in scrutinizing their loans. This carefulness on the part of the bankers served as a warning to business men and it began to be realized that prices had gone far beyond true values. In order to get themselves into a stronger position some of the business men began to sell silk and the price soon commenced to crumble. This price decline continued until silk that had been selling for around forty-five hundred yen per bale finally sold for less than fifteen hundred yen per bale. This enormous shrinkage in Japan’s chief export staple carried down the price of practically everything else, causing many failures, brought about the closing of a large and important bank, and resulted in the temporary closing of the principal exchanges of the country. Japan experienced a good old fashioned American panic.

Fall of Silver — Artificial Prices

Japan’s difficulties were made worse by the great fall in the value of silver because Japan sells a large part of her exports to China and other countries that are on a silver basis. The business man in China who had a considerable amount of silver on deposit in the banks found that this silver was worth less than half of its former value in gold standard countries like Japan. With the export market practically dead, and with many failures taking place it was of course necessary to close down many Japanese factories and to throw many men out of work. However labor in Japan is able to shift itself more easily than labor in America, and many of these working men went back to the country or secured some form of temporary low paid employment. This situation made it possible to maintain a fairly active honie market, and alleviated some of the difficulties of the situation. Furthermore the government took aggressive action and attempted to stop the decline in the price of some of the important staples. The government arranged to peg the price of silk at fifteen hundred yen per bale. It financed a pool that has bought and held large quantities of rice. It advanced money to industries in need of help, and it urged a decrease in the production of silk, rice, and other important products in order that it might be easier to maintain prices.