The Japanese Government's statement that it has not subsidized its industrial and commercial enterprises is true literally, but the student soon discovers the incorrectness of the statement in actual conditions. Firms bor rowed from banks; the banks went to the semi-official banks for their money; the semi-oficial banks got it from the Bank of Japan, the Bank of Japan got it from the Government The banks created for special purposes, like the Yokohama Specie Bank, Industrial Bank of Japan, or the colonization and agricultural banks enjoy special privi-Jeges in return for which they are bound to assume special responsibilities. Their great\ost responsibility was to keep the industry, commerce and agricul) ture of the country a going concern, and to do this they adopted the rather short-sighted policy of extensive credits on small collateral so that for a while Japan was the fear of every mercantile nation because of her competitive power. When the slump came the banks did not throw the unwise and unsticcessful firm.into the scrap heap- but kept them going. Stories were told of banks which had lost many times their capitalization and which were still going concerns supported by the semi-official banks. Some of the semi-official banks had come croppers largely because of the China and Siberian policies of the Government (Nishihara loans, for instance) but were still going strong because of assistance from the Bank of Japan.
Here was another vicious system which the important financiers and politicians of Japan were trying to solve. The earthquake solved it. Many names well-known in Japan and abroad will disappear within the next few months. It has been costly enough to carry them; it will be economic suicide to attempt to reconstruct them. And their absence from the Japanese commercial, financial and. industrial world will have a beneficial effect on economic conditions for they were forcing the stabilized firms into tight corners because of their speculative tendencies. Having no real responsibilities and knowing that they could find credit when their adventures left them short, they took chances which no upright business man would take.
The purpose of this article is not to give the impression that all Japanese business is unsound. It is to discuss abnormal conditions which grew up as a result of the war and which were' engrossing the attention of the constructive minds of the country. Foremost among the latter were subishi). Takatas, Furukawas, the Mitsuis, the Iwasakis (Mit-
and other leaders. The organization of the Mitsuis is so extensive and so great that even the earthquake hardly affects them. They are to Japan what Stinnes is to Germany, but more permanent, more stable, better organized and really more powerful in the determination of the affairs of the country. These firms will reconstruct Japan and their efforts will be unhampered by narakin.
Text read from the printed page and cleaned; old type leaves the occasional error.