not only dislocation of trades and crimes but even potential and actual menace of foreign intervention in one shape or another.

The Chinese are not blindly prejudiced against foreign capitalism. The leaders of thought already realize that unless they have the assistance of foreign capital and the employment of foreign technical skill the development of the natural resources of China on a large scale will be considerably retarded. The late Dr. Sun Yat Sen in his book called "The International Development of China," shared the same view. Only he laid down two criterions: The capital must be applied in a profitable manner and also the sovereignty of China must not be infringed upon.

In this vast country of China with its inexhaustible resources, there is really room for a great deal of foreign capital. It should be applied in such a way as not to disturb the existing indigenous industries of the Chinese people but to open up new avenues which would help natural development. Used in this way capital will have the cooperation of the Chinese people for they see in that nothing to infringe on the sovereignty of their nation.

At the present time foreign capitalists have made their investments in any way they can. Some of their enterprises even have the effect of increasing the internal strife of China. Others trusting to the treaty rights place their capital in railways and mines, have opened up what are called a "sphere of influence" for their own countries. The strongest opposition is offered to foreign investments of this kind.

Apart from investments that are harmful to China in the eyes of the Chinese, we can study investments in manufactures. Because of the "most favored" nation treatment contained in the treaties made by the powers with China and because of the concessions which China made to Japan in 1895, now shared by most foreign countries, the foreign manufactures have such privileges as exemption from the payment of the likin duties which Chinese manufacturers have to make in sending their goods inland. With those and other advantages, foreign manufacturers can produce and sell articles, in most instances more cheaply than even native goods. With such an unfair competition there seems to be no hope for indigenous industry.

Foreigners began manufacturing in China not only to save the cost of transportation but because of the cheapness of labor compared with that in other countries. Chinese cheap labor on the other hand is an object of resentment by the workers of other nations. In order to establish themselves in the industrial world, the Chinese workers want to preserve their industrious habits and increase their efficiency, at the same time, gradually raising their own standard of life. However, foreign capitalists

naturally resist this demand of Chinese labor to raise its standard. The fight can not be an even one. The foreign capitalists have great reserves and have the whip hand in every case. Moreover, having their own consuls to back them in the extra-territorial courts, the Chinese workers can be very successfully suppressed by these capitalists. In the recent troubles in Shanghai and other cities, capitalists even brought political pressure to bear on the Chinese Government. One can see that these actions will reap and are reaping very undesirable consequences.

Another remedy urgently called for is an adjustment in the tariff. In order that native industries in China may have a chance to develop, we must have the right to regulate our own tariff. Public sentiment on this point is becoming stronger day by day and if the question is not settled at any early date, it will become a prolific source of ill-feeling and resentment between the Chinese people and the nationals of other nations.

In conclusion, may I express the hope that this Institute as a result of its deliberation may come to see the necessity of bringing together the labor leaders around the Pacific for a frank exchange of views on their problems as bearing upon each nation and upon each other. I firmly believe that a thorough understanding between the labor leaders of the Pacific nations will be a powerful instrument for the preservation of peace in this part of the world.

C. INDUSTRIALIZATION OF JAPAN, BY TAKASHI KOMATSU

Industrialism in Japan is still in a stage of infancy. In her economic belief, Japan has been essentially an agricultural nation. Handwork was the prevailing method of manufacture and until recently practically all articles from beautiful fabrics of silk to crudest tools and utensils in daily use were made at home or in small shops. The system was not unlike the household industry which existed in England before the industrial revolution.

With the opening of the country to foreign trade, however, the people of Japan were brought into contact with the new economic system of the west and this naturally served to stimulate industrial activities. There arose the necessity of adopting a more effective method of production and this resulted in gradual development of modern factories.

In the industrial history of Japan there are two distinct lines of development: 1. The gradual transformation of household industry to the factory system; 2. Rapid introduction and development of new industries previously unknown in Japan.

Prior to the opening of the country to foreign intercourse, Japan was economically quite self sufficient. Trade and industry were developed to

meet the needs simply of local communities. Great capital was unknown and unnecessary. Even the articles of common use took the forms in which they could best be made by hand. In many instances application of machinery or of methods of large scale production was of no particular advantage because of the simplicity of hand work, cheapness of hand labor and limited extent of the market. To derive the benefit from the change into a factory system it would be necessary to change the system of marketing and sale. Naturally in manufacturing purely Japanese articles, the factory system has been developed only partially and household industry still continues.

The manner in which the old time household industries are being transformed into the factory system is shown in the manufacture of shoes and

of paper.

The making of chinaware and of toys are examples of industries which have been developed into the factory system in order to meet demands of the foreign market.

The most significant progress in the industrialization of Japan has been made by the introduction and development of the various industries which had never been known in Japan.

Industrialization is one of the chief factors in solving the grave problems of over-population. Many of the far-sighted leaders in Japan early recognized the importance of this movement. To encourage popular interest, model factories were established by the Government along several different lines. One of these enterprises that comes prominently to my mind is the model Portland cement plant which was established in Fukagawa, Tokyo. At first this plant was operated on a small scale, but it has developed into one of the largest industries of Japan. The production of cement in Japan is sufficient to supply the domestic market and also to make considerable exportation to China, Philippines, and other Oriental

countries.

Another enterprise is the cotton spinning industry. At the present time fifty-eight companies, composing the Cotton Spinners' Association, control nearly 90 per cent of the total production. There are 201 mills in this association backed by a capital of 319,000,000 yen and a reserve of 190,000,000 yen. This tremendous progress was made in the course of about 30 years against what seemed insurmountable difficulties. Both machinery and raw materials had to be imported from foreign countries and laborers had all to be trained. In spite of these handicaps, however, there are in operation today nearly four and a half million spindles. Japan stands among the leading nations in consumption of raw cotton. In 1922,

the importation of raw cotton from the United States, India and China reached the figure of 8,710,000 picules.

Again, we might speak of the woolen industry. Japan originally was far from being interested in woolen goods. As you know we had the silk and were quite satisfied with it. But in recent years the people of America began to use silk goods most lavishly and to keep pace with the times we thought it best to turn to woolen goods. The woolen industry was started by the government as a model enterprise in 1876. Naturally the labor was untrained, raw materials were hard to secure and the products were necessarily of very poor quality. Only the plainest materials were produced and they were used for uniforms of soldiers. It was not until 1887 that Japanese woolen goods began to appear on the market. The industry developed and it became possible even to undertake a considerable exportation. The production in 1917 was 44,022,000 yen but it increased to 162,538,000 yen in 1921.

Perhaps the industries which made the greatest strides during the European war are those connected with production of iron and steel. Before the war there were in Japan but twenty-two works producing 240,000 tons of pig iron and 250,000 tons of steel. In 1919 there were 300 works producing 877,000 tons of pig iron and 844,000 tons of steel. At the close of the war this industry suffered considerable decline but there is every hope for substantial developments in the future. In 1921 the output of pig iron was 566,531 tons and that of steel 557,826 tons. The consumption during that year amounted probably to 1,000,000 tons of pig iron and 1,200,000 tons of steel. The great difficulty confronting this important industry also is the lack of raw material for which Japan is largely dependent on China. During 1921 only 78,000 tons of iron ore was produced in Japan while 765,000 tons was supplied by China.

As a shipping man, I cannot omit mentioning shipping and ship-building industries. The first modern ship "Hitachi Maru" was built by Mitsubashi Dock Yard in 1898. In 1919 annual building capacity was increased to nearly 1,259,000 tons. We shall probably not be called upon to utilize this full capacity for many years to come, but there still remain over eighty building berths with annual capacity of 500,000 tons, which is probably five times the capacity before the war.

In shipping we find an unparallelled development during the recent war. Possessing only 15,000 tons of shipping in 1893, Japan has increased her tonnage to nearly 3,500,000 tons in 1923.

The tremendous development of Japanese industries during the war years may be seen from the fact that there were in 1914, 14,578 factories

operated by motor power, while in 1921 this number increased to 71,321. As to manual labor factories there was a decline from 17,139 in 1914 to 16,077 in 1921, indicating the manner in which the hand labor is being replaced by machines. The number of operatives in 1914 was 948,268 as against 1,686,353 in 1921.

In respect to the general industrial depression after the war, Japan has been no exception. We have been subjected to the severe and cruel necessities of readjustment but there is every hope of sound and steady employment along all lines.

From this brief survey, some idea may be gained of the obstacles in the way of the growth of industrialism in Japan on account of the lack of natural resources. The failure of the cotton crop in the United States and India will result in closing down the mills in Japan. I cannot forget the bitter experience of the ship-building industry caused by an embargo being declared on exportation of steel materials from America. Fortunately an arrangement was concluded between the American Government and Japanese shipbuilders to exchange steel materials for finished ships. America was in need of ships and Japan was in need of steel. This arrangement may be pointed out as one of the significant examples of industrial cooperation between different nations.

Aside from the lack of raw material, Japan is handicapped also by the lack of fuel. As to coal, Japan is supposed to possess deposits totalling eight billion tons, but only one billion and a half are said to be workable. The output of petroleum does not supply 30 per cent of the requirement. The seriousness of the situation is aggravated by the fact that we have only begun to use petroleum. To take care of the power problem, however, efforts are made on all sides to develop hydro-electric power and the progress along this line will doubtless serve to relieve the otherwise hopeless situation.

The next problem which must be confronted is the scarcity of domestic capital. Foreign capital should be invited to utilize the loyal and efficient labor of Japan. The policy has always been to permit only non-political investments and also to discourage any participation in unsafe or speculative enterprises. We have seen many successful examples of joint enterprises carried on by Japanese and foreign capital, as in the case of the General Electric Company. During recent months, loans were made aggregating 300,000,000 yen for hydro-electric companies, and further amounts are said to be under negotiation.

Perhaps the most peculiar tendency in the development of Japanese industrialism is the persistence of the old family idea. The traditional idea