GETTING STARTED
Chūemon opened his store with high hopes. But he must have known that establishing a successful business in a new market like Yokohama would not be easy. Unlike the wealthy Edo merchants, he came with very little capital and limited contacts or government influence, and he had no experience of the foreigners he was hoping to deal with. Seen from the outside, at least, he surely fit one samurai official’s description of the provincial Yokohama merchant: a man who dreamed of wealth “as though reaching for the clouds, or as though trees would turn into rice cakes.”64 Ernest Satow, a British diplomat who was resident in Yokohama in the early 1860s, commented that the Japanese merchant class were “adventurers, destitute of capital and ignorant of commerce.”65
This description seems too harsh. Chūemon was certainly an experienced businessman, and even if he did dream of riches in the new port, his goals were not purely selfish: he also aimed to help his agricultural community back in Kōshū. But given his lack of capital, it is easy to see how he might have appeared to others—and why he had to struggle so to get his business started.
By the end of July, the port was well and truly open for business. “The construction in this town is something extraordinary. Large numbers of people are coming to view it. There are 11 ships here, decorated for their foreign travels. Japanese are arriving in great numbers to see the place.”66
Business, however, was not getting off to such a good start. Chūemon explained to a group of eight business partners that the products they were sending him, such as dried grapes, tobacco, pottery, and cotton, were not selling. On the other hand, “The foreigners are buying large quantities of Seto ware [porcelain], lacquer, and kanten [agar-agar, a gelling agent made from seaweed] … There is also some demand for vegetables, fish, and chicken.” Most of these were not products of the Kōshū region. Instead of trying to compete in these markets, Chūemon suggested it might be more profitable to buy goods from the foreigners for resale in the Kōshū market. To that end, he asked each business partner to contribute three ryō ($6). The letters do not indicate whether or not he succeeded in raising the fifty dollars or so that he was looking for to buy foreign goods, but even if he did, the foreign merchants would hardly have been overjoyed. A successful Shanghai merchant would have been looking for transactions in the thousands, or even tens of thousands, of dollars.67
FIGURE 1.6 Utagawa Sadahide, Picture of Newly Opened Port of Yokohama in Kanagawa (1860). Chūemon’s store is on the right, near the front of the picture. Freer Gallery of Art and Arthur M. Sackler Gallery, Smithsonian Institution, Washington, D.C.: Gift of Ambassador and Mrs. William Leonhart, S1998.52a-c
Considering his disadvantages, Chūemon was actually quite successful in connecting with this exciting new market. But he also had an early lesson in its perils. Very soon after the port opened, Chūemon succeeded in selling on commission a consignment of silk from Hanbei of Ōno village to an Englishman, James Barber. At the time, Barber was Keswick’s assistant manager at Jardine, Matheson. Later, he was to start his own firm in Yokohama. He had a reputation for being a tough character.
On September 8, 1859, Chūemon wrote to his partners about a serious problem with the transaction:
As I wrote the other day, I would like to sort out the business with the silk thread, but Barber is obstinate and I’m unable to make any progress with him. I plan to take the matter to the town office, but it’s by no means easy. Right now there need to be rules governing the exchange between Japanese and English farmers and merchants. However, I will certainly not lose in this. We must be reasonable and keep calm. You must go and talk to [Hanbei] and tell him to remain patient for a little longer.68
It appears that Chūemon had delivered a small shipment of silk to Barber (or to Barber’s agent), for which he was expecting payment of some eighty ryō (about $160). For some unknown reason, Barber had failed to pay him.
Trade disputes between Japanese and foreign merchants were very common, which is hardly surprising given the different business cultures of the two groups. Certainly, there were numerous opportunities for misunderstanding and miscommunication. The problem was exacerbated by the lack of any effective dispute-resolution mechanism. According to the extraterritoriality clauses of the trade treaties, foreign merchants could be sued only in a court of their own nationality. Quite apart from the linguistic complications, British law required the loser in such a case to pay the court costs for both parties. According to Yuki Honjo, only six cases were brought by Japanese merchants in the entire decade of the 1860s.69 In practice, as we see in Chūemon’s response, Japanese merchants saw their best hope in mediation by the Kanagawa commissioners. Similarly, foreign merchants had no ready recourse when they had a complaint against a Japanese merchant. There was an ad-hoc system for adjudication of foreign suits against Japanese subjects by a Japanese magistrate in the presence of a Western consul, but it seems to have operated almost exclusively for criminal cases. Only after 1874 did the newly established Kanagawa court (saibansho) begin to offer regular adjudication of disputes.70 Until then it seems that, just as Chūemon took his complaint to the Kanagawa commissioners, so foreign merchants took their grievances to their diplomatic representatives in the hope of some redress. On April 1, 1864, for example, Samuel Gower of Jardine, Matheson wrote that he had placed a commercial dispute in the hands of British minister Sir Rutherford Alcock, who wanted to help, but “he does not seem sanguine of obtaining anything through the Japanese Government—unless it be the punishment of the man.” Gower added, “I believe myself that the man … deserves punishment.”71
There were numerous causes for complaint on both sides. As in the Barber case, Japanese merchants complained of the foreigners taking delivery of silk, whether a sample or a full shipment, and not paying for it. Typically, foreign merchants (or their Chinese managers) would examine samples of merchandise presented by Japanese sellers and agree on a price. The Japanese merchant would then have to deliver the full consignment of goods within a specified period, and, once delivered, the foreign merchant would inspect the goods in his company godown. Only when he was satisfied that the consignment fulfilled the contract would he pay the Japanese merchant.72 A common accusation was that foreign merchants would deliberately wait until a ship arrived with news of foreign market conditions; if conditions were unfavorable, the merchant would reject the goods awaiting approval in his warehouse, on the ground that they had failed his inspection.
Other complaints centered on the Chinese compradors (business managers), employees of the China-based foreign merchant houses who operated more or less independently within their employers’ houses of business. In most cases, the Japanese merchant was required to pay a commission, known as a “Chinese gift” (nankin shinjō), to the Chinese manager. Chinese managers were also accused of tampering with scales and a variety of other corrupt practices.73
The foreigners in turn complained of broken promises, silk deliveries of a lower quality than those promised in the samples, or Japanese merchants failing to deliver shipments at the agreed-upon price. William Keswick complained that “it is very disappointing that the Japanese have so very little respect for contracts and that we have no certain means of redress in cases of bad faith.”74 Ernest Satow offers a litany of dishonest practices on the part of Japanese merchants: “Foreigners made large advances to men of straw for the purchase of merchandise which was never delivered, or ordered manufactures from home on the account of men who, if the price fell, refused to accept the goods that would now bring them in only a loss. Raw silk was adulterated with sand or fastened with heavy paper ties, and every separate skein had to be carefully inspected before payment, while the tea could not be trusted to be as good as the sample.”
As a result, “the conviction that Japanese was a synonym for dishonest trader became so firmly seated in the minds of foreigners that it was impossible for any friendly feeling to exist.”75 James Barber himself complained in a letter to his head office t
hat “the dealers have no respect for their engagements.”76 Rutherford Alcock, the British envoy to Japan, called the Japanese merchants “among the most dishonest and tricky of Easterns.”77
Unfortunately there is no record as to how or if Chūemon’s dispute with Barber was resolved, but in any case Chūemon seems to have learned from his mistakes. There is only one other dispute with a foreigner recorded in the letters: in February 1864, he successfully negotiated the handover of an outstanding balance of a thousand dollars, presumably owed him by a foreign merchant in payment for a delivery of export goods, in a late-night negotiating session at the government offices.78 By this time, it appears that the Japanese and foreign merchants had developed a functioning system of dispute resolution through the good offices of the Japanese authorities. In general, Chūemon seems to have developed excellent relationships with foreign merchant houses. In fact, he was much more likely to run into problems with his own government, which at times during the 1860s tried to restrict the volume of foreign trade, or even prevent it altogether.
More than business relations or regulation, it was the lack of capital that defined Chūemon’s early years in business in Yokohama. From the beginning, his letters were filled with pleas to his son and business partners to advance him more money, to wait longer for payment of debts he owed them, and to borrow money in Kōshū on his behalf. He lacked the capital to purchase an inventory of stock to sell from his shop, and, as we will see (chapter 2), he even lacked at times the money for his day-to-day expenses. And in this he was not alone. Among the provincial merchants who tried to establish themselves in Yokohama, lack of capital was the primary reason for business failure.
FIGURE 1.7 Picture of the American proprietor of number 33, Wenrīto (E. W. van Reed), on horseback inside his compound. Utagawa Sadahide, Yokohama kaikō kenbunshi (ca. 1863)
The capital shortage reflected the contradictions of the treaty port environment. The majority of the Japanese merchants were not capitalized on anything like the scale needed to fill the enormous foreign demand for silk, tea, and other export commodities. To give an example, a single packhorse load of silk thread purchased in the producing region cost from four hundred fifty ryō ($900) upward—many times Chūemon’s entire income from the previous year.79 Financing was available both in Yokohama and in Kōshū, but in Kōshū it was scarce and depended on personal relationships, while in Yokohama capital was relatively abundant but commanded very high interest rates exceeding 10 percent per month.80 By contrast, foreign merchants were extremely well capitalized (though limited at times by their restricted access to Japanese currency) and could easily have extended credit to their Japanese suppliers. However, the available legal mechanisms gave them almost no recourse if their Japanese debtor defaulted. They had nothing to rely on but trust, and that was in extremely short supply in the early years. In May 1860, William Keswick advanced a large sum to a Japanese merchant, Takasuya Seibei, whom Keswick was “satisfied … is to be trusted. He is a man of position and the most respectable merchant in Yokuhama [sic].”81 However, Keswick’s successor had to ask the British minister to demand Seibei’s arrest for absconding with the money.82
Chūemon arrived in Yokohama with enough capital to get his trading license and lease a lot, but little more. He had virtually no money of his own, so he was dependent on his business partners and friends in Kōshū to advance him the funds to build his shop and purchase inventory. Even before opening, Chūemon was already begging his business associates to advance him more capital. In a letter dated April 18, 1859 (Ansei 6/3/16), he asked for a loan of twenty ryō: “If I can just raise this money, I foresee great profits in the future, so please, please lend me the money as requested.”
This became the tone of many of Chūemon’s letters for the next two years. When he was not begging his business partners to advance him funds, he was cajoling his son Shōjirō, who had remained in the village to carry on the family farming business, to raise money on his behalf.
On December 27, 1859 (Ansei 6/12/4), as the Japanese calendar year began to draw to a close, Chūemon faced the reality that he could not fulfill the traditional year-end settlement of debts. He wrote to his son, “I know that I need to send you money, but this winter I am extremely stuck for funds, and there is nothing I can do about it. Please discuss this with your mother, and also with Matsujirō and Jizaemon, and see if you can make some sort of plan. Also please go to Okamura and consult with him. You must also go to the village office, and also to Buheita of Higashi Takahashi village and consult with them. You must consult with vagrants and absolutely everyone.”83
Chūemon had to deal with these issues in relative isolation. Although he had collaborators in Yokohama, his closest friends and business partners as well as his family were all back in Kōshū. Undoubtedly Chūemon missed his wife and children. His wife in particular was a close collaborator in Chūemon’s business affairs, and he planned to bring her to Yokohama as soon as he was settled enough. Separated from his family by several days’ walk, he worried about their health and well-being. In 1858–1859, Japan was swept by cholera and measles epidemics that many have linked directly to Japan’s opening to foreign contact. Between them, they are thought to have killed as many as a hundred thousand Japanese. On September 22, 1859, Chūemon wrote to Shōjirō, “I hear that many people in the village have died of sickness, and this makes me a little worried about you. You must have faith and you must not be negligent.”84
Chūemon’s younger son Naotarō was more than eager to join his father in Yokohama. For a second son with no inheritance, the family’s new venture in Yokohama represented an opportunity to escape from the straitjacket of village life. But Chūemon was concerned about Naotarō’s immaturity and impatience: “Please tell him that while his father is away he must be especially patient. If he works hard at farming this year and is patient, then I will bring him to Kanagawa. Please tell him that he must certainly have patience.”85 Underlying Chūemon’s encouragement was his evident worry about his younger son’s character. In a letter dated August 6, Chūemon admonished Shōjirō to “tell [Naotarō] again and again that he must not be idle when I am away. And give him strict instructions not to go out and play at night.”86
Although Chūemon missed his family and undoubtedly felt far from those he loved, in Yokohama he was literally swamped with travelers and merchants from Kōshū, who had come to try their luck selling produce to the foreigners and who looked to Chūemon for assistance and accommodation. “Every night forty or fifty or sixty people are staying here. They are bringing many packages with them, and there’s nowhere to sleep. People are sleeping back-to-back in the entranceway.”87 Observing this situation, Chūemon saw a business opportunity if he could expand his premises to accommodate guests properly. Early in 1860 he wrote, “Many merchants are arriving from all over Japan, and there are no facilities for their accommodation. Many of them are high-class customers, and I would like to be able to accommodate them.”88 Chūemon would have to wait another eight years before he could realize his vision of opening an inn to accommodate the flood of visitors.
THE GOLD RUSH
The products offered for sale by Chūemon in these first months covered a wide range. The idea was to sell the products of Kōshū to the entire world. However, Chūemon quickly discovered that the foreigners were interested in only a small range of products. Foremost among these were silk and gold, neither of which Chūemon was easily able to provide. Silk was too expensive for Chūemon to purchase on his own account, and the sale of gold to foreigners was tightly controlled by the Japanese government.
In spite of the difficulties that foreigners had in obtaining gold, this was the commodity most in demand in 1859. The reason was the huge disparity between the gold-silver ratio in Japan and that in the rest of the world. In Japan, the nominal ratio was five to one. In the global market, it was fifteen to one. According to the trade treaties, foreign silver would be exchanged for Japanese one-bu silver coins on
a weight-for-weight basis. Based on this agreement, one hundred Mexican silver dollars (the prevailing trade currency in East Asia) bought three hundred one-bu coins, which in turn bought as many as seventy-five gold koban coins (the koban was the standard gold coin, worth four silver bu) on the black market. A foreign merchant could ship those koban to Shanghai, sell them for three hundred Mexican dollars, and bring the silver back to Japan to make another purchase. With these easy profits in sight, the demand for Japanese gold was overwhelming.
The Japanese government argued in vain that its monetary system was not strictly based on gold or silver content but rather was a notional system in which coins were issued as tokens of value. In other words, the actual buying power of the one-bu silver coin was much higher than its silver content. The government even tried minting a new half-bu coin, especially for the foreign trade, with three times the silver content of the half bu circulating in the rest of Japan, to reflect its “true” value relative to gold. But this elicited protests from both foreign and Japanese merchants, and the new coin had to be abandoned.89
The British minister, Sir Rutherford Alcock, was sympathetic to the plight of the Japanese. In his memoir, he recalls a top Japanese official complaining that the opening of trade had brought Japan “nothing but expense. Everything is getting dearer and if this be the result of foreign trade at its first beginnings what will it be in its development?”90 But Alcock and other foreign envoys were more concerned to preserve their rights under the treaties than to help the Japanese manage their consequences.
The export of currency—other than copper coins—was explicitly permitted by Japan’s treaties with the foreign powers. Nevertheless, the shogunal government tightened its controls over the sale of gold to foreigners, threatening Japanese subjects with death if caught. It also tried to thwart the trade by severely restricting the issue of Japanese silver coins to foreigners—using the excuse that the currency was all needed for the reconstruction of the shogun’s castle after a devastating fire. These policies were effective to some extent, but Japanese and foreign traders did their best to get around them, and the trade in gold coins continued. In practice, foreigners were willing to pay more than the legal value of the gold they purchased because of the high profits they could still get on the Shanghai market. On the other hand, Japanese black marketeers were willing to risk their lives selling gold coins because of the high prices the foreigners were willing to pay. As a result, in spite of the best efforts of the Japanese, possibly as much as sixteen million dollars’ worth of Japanese gold (based on the global price) was exported to Shanghai in the first months after the opening of trade.91
The Merchant's Tale Page 6
