TuoUGHTFUL Japanese realise, as we showed in an article on the subject not long ago, that what their country is pining for is the introduetion of foreign capital. The labour is there, the raw material is there or easily procurable, and the tendency to industrial activity is there; but Japan has never been a rich country, and what is wanted is capital from abroad to enable the resources of Japan to be developed. Capital is shy of coming where it has not full confidence in the commercial in: egrity of those who invite it; ordinary commercial n-ks it is ready to face, Dut it will not expose itself to loss by commercial dishonesty. Unfortunately for the industrial progress of Japan, just when her best men are trying to get foreign capital to believe in the security of investments in the country, and to feel that her financiers and merchants are actuated by the same laws written and unwritten as those current in the West, something happens to suddenly discourage the newly-growing confidence, and capital which was just being tempted to come out retires timorously into its shell. Such an incident was the case in which the Russo-Chinese Bank and the 130th Bank of Japan were recently involved, and which was only finally settled on the 10th inst.
The circumstances of the case are so simple that it is almost incredible that any dispute could have arisen out of them. On the lst of February last the Russo-Chinese Bank lent the Toyokawa Railway Ca. the sum of 200,000 yen, taking from the Railway Ca. two six months' promissory notes for 100,000 yen able on the 21st of August.
The Russo-Chinese Bank declined to accept the notes without the endorsement of a responsible bank, and accordingly the Railway Ca. arranged with the 130th Bank to endorse the notes, paying the bank as customary a commission for the accommodation. The endorsement was made by the manager of the Nishijin branch of the 130th Bank, this manager having occupied that position for two years or more and being generally recognised as the fully authorised agent of the bank. When the tivo notes became due, the Toyokawa Railway Ca, had no money to meet them with and refused pa ment, and the Russo-Chinese Bank had recourse to the endorsers, the 130 h Bank. To the astonishment of the Russo-Chinese Bank payment was refused on the ground that the manager who had endorsed them was not specially authorised to endorse those particular bills, and therefore the bank was not liable; although the commission paid by the Railway Ca. for the accommodation had been entered in the Bank's books and passed under the eyes of the directors. There were some other technical objections, such as that the notes were not presented for payment at the right blaze, that the Russo-Chinese Bank wassometimesdescribed by that name, and that sometimes the name of the manager, Mr. Benedickter, was used and that it sometimes written "Ka Em Benjikuteru," and sometimes "Caru Benejikatta." There were one or two other trivial defences of this kind, but the main "that while it was not that the manager of the Nishijin branch of the defendani's bink endorsed the notes, it was clear the notes could not be classed as commercial bills duly discounted by the bank and rediscounted by the plaintiffs bank, and this fact being very well known by the plaintiff, as responsibility rested upon defendants to recognise them."
Such a scandalous repudiation of an incontrovertible liability struck the foreigners in Japan with astonishment, and was viewed with deep disgust by a large number of Japanese. The Osaka Japanese Chamber of Commerce made every effort to get the case kept out of Court and referred to arbitration, endeavouring to get foreign friends of Mr. Bene-dichter to persuade him to consent to this course, though it is perfectly obvious that no bank manager could consent to arbitrate such a perfectly clear case as this. The following extract from the "Japan Times" (a native paper) of the 10th inst. shows how the matter was regarded by the Japanese Press: "Nothing could justify the bank's refusal to recognise its responsibility for a transaction entered into by one of its properly appointed officials. On this point there has never been any difference of opinion among the Japanese, as unmistakably shown by the strong language in which the Osaka, bink's conduct has been condemned by the leading organs of public opinion." The Osaka Chino Sabausho, before which the suit of the Russo-Chinese Bank against the 130th Bank was tried, gave a most uncompromising judgment in favour of the plaintiff, the bench being composed of Judge Nishimura Chitaro, presiding, and Judges Komobuchi Kiyoo and Toda Tsunetaro. In their judgment they go carefully through the points raised for the defence, putting them all aside, the paragraph dealing with the main defence being as follows:—"1.—The first point of the defendant's defence rests upon assertion that the two notes in this case are both so-called circular notes; that defendant did not pay to the drawer of the note any value or equivalent such as is paid by the acceptor of a note to its issuer, nor did he receive any such value or equivalent from the plaintiff, with the result that no obligation lay upon the defendant to pay the amount demanded. This, however, is a mere oral statement, without any evidence to support it. Moreover, the defendant admitted that in the book of the Nishijin branch of the defendant's bank there was entered the receipt of a fee for the discounting of the notes, amounting to Yen 1,100 odd.In view of these facts the defence on this point cannot be accepted."
The concluding paragraph of the judgment is: "For the reasons given, ino part of the defendant's defence is good in law, and the defendant must comply with the demand of the plaintiff for the payment of the prin-civil and interest." The only thing to be said for the 180th Bank is that its directors—under strong pressure, it is understood, from leading Japanese commercial and financial men in Osaka, and higher authorities at the capital—satisfied the judgment of the Court immediately without delaying matters by an appeal. The "Kobe Chronicle," to which we are indebted for the translation of the judgment, gives the following account of the final settlement "Tu response to a communication from the 130th Bank, Hong Ping-son and another employe of the Kobe branch of the Russo-Chinese Bank Banke at Osaka on the afternoon of aid a visit to the office of the 130th
the 10th inst. and received payment of 200,000 yen for the notes, together with tutorest amounting to 1,610.95 yen. The transaction was carried out in the presence of Mr. Sugiki, the manager of the bank, Mr. Yokoyama, the President of the Toyokawa Railway Company, and Mr. Moriya, the legal adviser to the Toyokawa Railway Company. At the same time the 130th Bank received a promissory note for 200,000 yen and a certificate for payment from the Toyokawa Railway Company."
While it 1s satisfactory to see that the Press in Japan is sound in a case of this kind, and the Osaka Court equally sound, it does a great deal of injury to Japan's credit that what was thought to be a responsible bank should endeavour to evade such a just liability. The directors were doubtless afraid that the shareholders would haul them over the coals for running the risk of losing some 200,000 yen in* an attempt to bolster up an insolvent railway; but they recked nothing of the injury that they were doing to their country, for capitalists will not lend their money where they may have to go to law to get it back at the due date.
Text read from the printed page and cleaned; old type leaves the occasional error.