Memorandum., March 6, 1865

Memorandum.

The rumors which now prevail with respect to the existence of an extensive design for the purchase of the raw silk and silk-worms’ eggs of Japan, and despatching these to one particular market, to lay down funds required for the completion of contracts entered into on behalf of the Japanese government in that country, are of a nature calculated to create anxiety.

These rumors have been steadily on the increase, though they have not assumed such a shape as to require the use, in speaking of them, of individual names; still, from their character and persistence, the undersigned are justified in applying to the Japanese government for general information as to whether any projects of the kind have been formed, and their nature, because, if the Japanese government is not able to assure the undersigned that such designs have not been or will be formed, it would be the duty of the undersigned to point out the difficulties which such plans are certain to create, and adopt, in doing so, the weightiest form of remonstrance.

The silk restrictions of 1863 and 1864, which consisted in the detention of that article at Yedo, were clearly contrary to treaties, which provide that (Art. xiv, British treaty) foreign merchants shall be allowed to trade freely with Japanese merchants in all lawful articles according to the stipulations in the treaties and the regulations.

There is not the slightest disposition on the part of the undersigned to complain of the selection by the Japanese government of any partial country for the supply of its stores, ships, and munitions; neither of the bringing of silk into open markets at Yokohama and the other ports is not interfered with, is there any objection to the Japanese government sending home silk instead of dollars to pay for their contracts. The experience of all commercial countries proves, beyond doubt, that it is neither wise nor prudent in a government to make themselves merchants. Whenever a government is known to be in the market to buy anything, the price is sure to rise; if it wishes to sell, it is equally sure to fall, through the tricks of individual merchants, who are always jealous of government as competitors, and never think it any sin to fleece them. But both governments and individuals have to pay for their experience, and only learn to abide by true principles when they find it is more costly to deviate from than to adhere to them.

But this is not what the reports point to.; they mean a repetition of the restrictions of these last years, namely, that the native merchants are not to be allowed to bring their silk to Yokohama till they have first sold as much as the government wants at a lower price. Now this is simply a repetition of the silk restrictions of 1863 and 1864, with the single difference that its effect is to create a total or partial monopoly in favor of the country to which the silk is destined.

The effect on the merchants of other foreign countries settled in Japan is the same. There is no free market for the purchase of silk to which the Japanese traders are permitted to bring produce, on payment of the customary and regular transit dues. The price of any silk which is then brought into the market is heightened, because the supply has been diminished in proportion to the amount of the quantity brought through this forced reduction.

Naturally, if, after the communication of the views of the undersigned, they find from actual experience that there is a repetition of the restrictions alluded to, the government of the Queen and King will look to that of the Tycoon for explanation of designs which prevent British and Dutch subjects from trading in the open markets provided by treaty. On such a point they will make no question with any other party than the Tycoon’s government.

But there is another point of view in which it is the duty of the undersigned to invite a consideration of these projects as rumored, which appear to them to rest on an unsound basis, and they believe are supported by false arguments. It is said there would be presumably greater profits on Japanese produce if consigned abroad for sale, in furtherance of these designs, and not sold in Japan. Why should not Japan, therefore, keep to herself the profit that lies between the foreign purchaser of the silk in Yokohama and the manufacturer in the foreign country?

This is true in a way, but not in the manner represented.

If the Tycoon’s government were to encourage Japanese merchants and commercial agents to settle abroad in the great marts of the world—as London, Paris, Manchester, Lyons, Amsterdam, Hamburg, New York, &c.—there to receive the produce of Japan on consignment, and thence send back as returns such articles as are wanted, and, when sold in Japan, will fetch a profit, the profit both ways would be saved, minus the outlay involved in these foreign Japanese mercantile establishments. Nothing would give the governments of their Majesties the Queen and King greater pleasure than to witness such a step on the part of the government of the Tycoon. Already have numerous youths from the estates of the Tycoon and the princes been sent to Europe for instruction in sciences and arts. Why not send abroad the sons of Japanese merchants and commercial agents also to be instructed in the counting-houses of these great trading cities, and afterwards form in these countries establishments of their own? Such a step would be, indeed, the true reunion of Japan to the world.

But the mere consignment of whole or part of the available produce not required for consumption in Japan to one foreign mart will not secure a higher price. The essence of high price is competition. There are in Yokohama merchants from England, France, Holland, Switzerland, Germany, America, competing keenly with each other, face to face, with equal or greater number of Japanese merchants; whereas, if a particular market belonging to one of these nations is chosen, the competitors are in effect restricted to one section of the six or seven now to be found in Yokohama, so far as the side which will correspond to the foreign side of the Yokohama market is concerned, while the Japanese side must, as things now stand, be entirely represented by foreign agency. The eminent statesmen who govern Japan will, if they weigh such considerations, have no difficulty in arriving at the conclusion that the best market for Japanese produce is to be found in submitting it to the greatest amount of competition. It is by steadily adhering to true commercial principles that the financial operations of a government are best conducted. Every government does wisely, without foreign interference, to levy such steady and equitable taxes on its exports, imports, and produce as are requisite to supply the wants of the state, but the sudden creation of monopolies, and the imposition of restrictions to effect particular objects, is wasteful and improvident; a nation may be great and powerful for other reasons in spite of them, but never by reason of them.