JAPAN, 1905-1914

By

wane. From 1905 to 1914 the world was several times agitated by the possibility of a JapanAmerican war, while the Anglo-Japanese alliance which had been hailed with such enthusiasm in 1902, and which had subsequently been revised and reratified, was looked upon as a burden by a large portion of the population. At the same time the policy of a 'forward movement' (as it was called) in Asia began to play a very important part in the national councils. Korea was annexed notwithstanding previous promises to maintain its independence, and great efforts were made to secure the control of Manchuria. their victory over the Russians the Japanese acquired not only Port Arthur and Dairen, but also the section of the Manchurian Railway south of Changchun. This they used as a means of furthering their influence. The new railway was run by a South Manchurian Railway Company, half of whose £20,000,000 capital was subscribed by the Government. This company soon exercised such rights in Manchuria as the old East India Company had done in India. It undertook the management of the Dairen harbour, the working of the Fushun collieries, the laying out of the new towns, the establishment of hotels, and the general development of the industrial, commercial, and the agricultural resources. Japan secured the right for her consuls to act as commissioners of the Chinese Government. Their powers have grown so wide that they include all matters appertaining to an ordinary State, such as justice, education, public health, and communications."W. M. McGovern, Modern Japan, pp. 206-208.See also MANCHURIA: 1905-1908.-A second result of the Russo-Japanese War was the renewal of the Anglo-Japanese Alliance (in 1905) with important modifications which indicated the new status of Japan in the Far East. The text of the agreement follows:

AGREEMENT BETWEEN THE UNITED KINGDOM AND

JAPAN.

"PREAMBLE. The Governments of Great Britain and Japan, being desirous of replacing the agreement concluded between them on the 30th of January, 1902, by fresh stipulations, have agreed upon the following articles, which have for their object

"(a) The consolidation and maintenance of the general peace in the regions of Eastern Asia and of India.

"(b) The preservation of the common interests of all powers in China, by insuring the independence and integrity of the Chinese Empire and the principle of equal opportunities for the commerce and industry of all nations in China.

"(c) The maintenance of the territorial rights of the high contracting parties in the regions of eastern Asia and of India, and the defense of their special interests in the said regions.

"Article 1. It is agreed that whenever in the opinion of either Great Britain or Japan any of the rights and interests referred to in the preamble of this agreement are in jeopardy, the two governments will communicate with one another fully and frankly and will consider in common the measures which should be taken to safeguard those menaced rights or interests.

JAPAN, 1905-1914

tracting party will at once come to the assistance of its ally and will conduct the war in common and make peace in mutual agreement with it.

"Art. I. Japan possessing paramount political, military, and economic interests in Korea, Great Britain recognizes the right of Japan to take such measures of guidance, control, and protection in Korea as she may deem proper and necessary to safeguard and advance those interests, provided always that such measures are not contrary to the principle of equal opportunities for the commerce and industry of all nations.

"Art. IV. Great Britain having a special interest in all that concerns the security of the Indian frontier, Japan recognizes her right to take such measures in the proximity of that frontier as she may find necessary for safeguarding her Indian possessions.

"Art. v. The high contracting parties agree that neither of them will without consulting the other enter into separate arrangements with another power to the prejudice of the objects described in the preamble of this agreement.

"Art. vI. As regards the present war between Japan and Russia, Great Britain will continue to maintain strict neutrality unless some other power or powers should join in hostilities against Japan, in which case Great Britain will come to the assistance of Japan and will conduct the war in common and make peace in mutual agreement with Japan.

"Art. vII. The conditions under which armed assistance shall be afforded by either power to the other in the circumstances mentioned in the present agreement, and the means by which such assistance is to be made available, will be arranged by the naval and military authorities of the contracting parties, who will from time to time consult one another fully and freely upon all questions of mutual interest.

"Art. VIII. The present agreement shall, subject to the provisions of Article VI., come into effect immediately after the date of its signature and remain in force for ten years from that date. In case neither of the high contracting parties should have notified twelve months before the expiration of the said ten years the intention of terminating it, it shall remain binding until the expiration of one year from the day on which either of the high contracting parties shall have denounced it. But if when the date fixed for its expiration arrives either ally is actually engaged in war the alliance shall ipso facto continue until peace is concluded.

"Japan's foremost aspiration to-day is to become a great factor in the commerce of the world. If she succeeds in this direction she will be enabled to support more comfortably than hitherto her increasing population upon the comparatively small area of land at her disposal. If her carrying trade increases, as it probably will, in proportion to her industrial expansion, half a million Japanese will eventually be living on her merchant ships alone. It is, therefore, but natural that she should make supreme efforts to become a dominant economic factor in China. She sees in that country of two million square miles untold resources as yet little exploited. She sees in the four hundred million souls of China the possibility of creating a vast market for her merchandise. These are the bottom facts which afford impetus to Japan's Chinese measures, though her ambition on the Asian continent must at times have seemed political rather than economic. In pursuing this policy Japan has no intention of hindering American

"Art. I. If by reason of unprovoked attack or aggressive action, wherever arising, on the part of any other power or powers either contracting party should be involved in war in defense of its territorial rights or special interests mentioned in the preamble of this agreement, the other con

activities in China."-K. K. Kawakami, Japan in world politics, p. 141.-"The importance of China to Japan from the economic point of view is enhanced by the following significant fact:Japan needs raw material. Apart from foodstuffs, she requires cotton, oil, and coal, and the greatest handicap to her industries is that they depend upon foreign iron and steel."-N. Golovin and A. D. Dubnow, Problem of the Pacific in the twentieth century, p. 33.-Toward the ambitions of Japan in China, the Western Powers maintained an attitude of watchful acquiescence, which was confirmed, not only by the Anglo-Japanese Alliance, but by a treaty between France and Japan which was signed on June 10, 1907, and the RootTakahira Agreement (November 30, 1908). By the terms of the Franco-Japanese Treaty France recognized the rights of Japan in Korea and her special interests in Manchuria, and Japan, on her side, promised not to interfere with French possessions in Siam and Indo-China. The text of the Root-Takahira Agreement is as follows:

"I. It is the wish of the two Governments to encourage the free and peaceful development of their commerce on the Pacific Ocean.

"II. The policy of both Governments, uninfluenced by any aggressive tendencies, is directed to the maintenance of the existing status quo in the region above mentioned, and to the defense of the principle of equal opportunity for commerce and industry in China.

"III. They are accordingly firmly resolved reciprocally to respect the territorial possessions belonging to each other in said region.

"IV. They are also determined to preserve the common interests of all Powers in China by supporting, by all pacific means at their disposal, the independence and integrity of China and the principle of equal opportunity for commerce and industry of all nations in that Empire.

JAPAN, 1905-1914

ish Columbia and the State of Washington (19061907) were answered by a bitter wave of antiforeign and especially anti-American feeling. At the same time it must not be forgotten that there is quite as much discrimination in Japan against the white man as in America against the Japanese. The United States is not the only country which objects to the importation of coolie laborers. "Australia and Canada exclude all Orientals. Japan herself will not permit aliens to own land. It will not permit Chinese or Korean coolies to settle in Japan as farm-laborers, the reason being that it would lower the wages of the Japanese."-W. B. Pitkin, Must we fight Japan? p. 474.-The mutual attitude of Japan and America in this matter is recognized in the revision of the commercial treaty between the two countries in 1911 which "expressly reserves to each country the right to say upon what terms or under what conditions, if any, a foreign corporation may do business in that country."—Ibid., p. 456.-And the "Gentleman's Agreement" is confirmed in the following declaration, signed by Y. Uchida, February 21, 1911, appended to the Treaty. "In proceeding this day to the signature of the Treaty of Commerce and Navigation between Japan and the United States, the undersigned, Japanese Ambassador in Washington, duly authorized by his Government has the honor to declare that the Imperial Japanese Government are fully prepared to maintain with equal effectiveness the limitation and control which they have for the past three years exercised in regulation of the emigration of laborers to the United States."-For text of treaty, see IMMIGRATION AND EMIGRATION: United States: 1862-1913.-Such re-assuring exchanges between diplomats, however, did not restrain the mutual ill-feeling on both sides of the Pacific, and when California instituted anti-Japanese legislation in 1913, intense feeling was thereby engendered. "The guns of Tsushima, of Port Arthur, and of Mukden have reverberated throughout the British Empire. Australia, conscious of her huge and unpeopled territories, has been brought by a dread of an Asiatic invasion to recognize her own helplessness, and to take some steps for her own defence. In Canada the victors were feared not as warriors but as labourers, and the situation created by the anti-Japanese riots in Vancouver in 1907 would have been dangerous but for the calmness of the authorities at Tokyo. The commercial treaty of 1894 between Great Britain and Japan confers upon the subjects of either nation the right to enter, travel, or reside in the dominions of the other; the Japanese availed themselves of these rights to settle in British Columbia to the real or fancied detriment of the white men who had to compete with them. Disturbances followed, and British Columbia passed an anti-immigration act which conflicted with the privileges conceded by treaty to Japan. The Japanese Government preserved its dignity by insisting on the formal recognition of its rights, but it quelled the agitation by consenting not to exercise them in a way to cause friction; the difficulty was solved by restricting the number of emigrants allowed to leave Japan for Canada. . . . In Australia legislative restrictions have practically closed that country to Japanese labour."-R. P. Porter, Japan the new world-power, pp. 115-116, 151.— "In 1910 the Russo-Japanese Convention of July 1907 was superseded by a further convention, according to the terms of which the contracting parties agreed to abstain from railway competition in Manchuria, to maintain the status quo in

"V. Should any event occur threatening the status quo as above described, or the principle of equal opportunity as above defined, it remains for the two Governments to communicate with each other, in order to arrive at an understanding as to what measures they may consider it useful to take." In addition there was an oral agreement between the United States and Japan, called the 'Gentleman's Agreement,' entered into in 1908 by Secretary Root and Ambassador Takahira, in accordance with which the Japanese Government would itself withhold passports from all laborers who might desire to go to the United States. In other words, the only restriction upon Japanese immigration is a voluntary one on the part of Japan, which of course can be terminated at any time by that Government. At first it was an oral agreement, but later was embodied in a memorandum, and then in 1911 supported by

[a] written pledge."-W. B. Pitkin, Must we fight Japan? p. 457.-See also CALIFORNIA: 19001920; U.S. A.: 1907-1917.

The Root-Takahira Agreement touches, as gently as possible upon two questions which, during the following years became the paramount issues in the relations of the countries bordering upon the Pacific, and especially between Japan and America, the most powerful of them all-(1) the economic development and political integrity of China, and (2) the penetration of lands held by white men (in Australia, Canada, and the United States) by Japanese laborers. The segregation of Japanese children in the San Francisco schools and the riotous attacks on Japanese laborers in Brit

Manchuria, and to exchange communications in case anything threatened the existing arrangements in Manchuria. In 1911 the Anglo-Japanese Alliance was modified once more, the annexation of Korea making the Korean clause in the instrument of 1905 no longer necessary; the rapprochement of Britain and Russia removed the necessity for the clause which referred to India, and the Arbitration Treaty between Great Britain and the United States necessitated the deletion of the article which bound the contracting parties to come to each other's assistance in case of an unprovoked attack on either by another Power. The emasculated Alliance, which provided for the maintenance of the peace in the Far East, was

COUNT OKUMA (SHIGENOBU)

It was

regarded with little favour in Japan. called 'unilateral' by the Nichi Nichi, and the Hochi declared that 'Japan is now America's slave and India's policeman.' The net result of these various treaties and conventions was to consolidate and strengthen Japan's position in Asia. But if the European Powers with interests in Asia were, for reasons of their own, not unwilling to recognize and even further Japan's ambitions, the United States regarded the paramountcy of the Island Empire in the Far East with some anxiety. But it is doubtful if any open conflict of interests would have arisen had it not been for the action of the State of California in raising the so-called 'school question,' which developed into an agitation against the admission of Japanese labourers into the United States."-W. W. McLaren, Political history of Japan during the Meiji era, p. 322.

1905-1922.-Occupation of Manchuria.-Commercial expansion in Asia.-"The lease of South Manchuria lapsed to Japan by the Portsmouth Treaty concluded in 1905. The original term was to expire in 1923 but was extended till 1997 by the Sino-Japanese Treaty signed on May 25th, 1915. Kwantung Province forms the southern part of Liaotung Peninsula. . . . The area covers, including the 40 islands adjacent to the peninsula, 218,757 square ri. [including the free port of Dalny]. ... At the same time that Japan began her territorial expansion, her foreign trade increased enormously. The commercial importance of the Asiatic Continent in . . . [the foreign trade of Japan] has become more and more pronounced. In 1882 Europe stood at the head of the list in the volume of Japan's exports followed by America and Asia, while in imports Europe headed the list followed by Asia and America. Coming to 1889 the relative positions of these great divisions were reversed, and in exports Asia came first followed by America and Europe. In imports also Asia occupied the same position, after which came Europe and America. This relation [was] further strengthened [after the Great War]." -Japan Year Book, 1921-1922, pp. 608, 398.-See also MANCHURIA: 1900-1910; 1905-1908; 19051914; 1919-1923; DAIREN.

1907. Represented at second Hague conference. See HAGUE CONFERENCES: 1907.

1907-1909.-Visit of United States fleet. See U.S.A.: 1907-1909.

1908.-Represented at maritime conference in London. See LONDON, DECLARATION. OF. 1909.-International opium commission. OPIUM PROBLEM: 1909 (February).

See

1909-1914.-Naval status. See WAR, PREPARATION FOR: 1909-1914.

1909-1921.-Japanese question in California.Heney-Webb law.-Legislation of 1920. See CALIFORNIA: 1900-1920; RACE PROBLEMS: 1913-1921. 1910.-Formal annexation of Korea. See KOREA: 1910.

1911.-Anglo-Japanese Alliance. See ANGLOJAPANESE ALLIANCE.

1911. Treaty of commerce and navigation with United States. See IMMIGRATION AND EMIGRATION: United States: 1862-1913.

1911.-Member of consortium to give financial aid to China. See RAILROADS: 1905-1921. 1911.-Lieutenant Shirase's expedition to South Pole. See ANTARCTIC EXPLORATION: 1911.-Agreement with United States, England and Russia regarding pelagic sealing. See FISHERIES: 1911-1912; PRIBILOV ISLANDS.

1911.

1911.-Child labor law. See CHILD WELFARE LEGISLATION: 1911-1919.

1911.-Customs agreement with Canada. See CANADA: 1911-1913.

1912.-Rumor of acquisition of naval base on Magdalena bay. See U.S.A.: 1912 (July). 1912.-Conspiracy case. See KOREA: 1912. 1914 (Sept. 5).-Baron Kato's address to Imperial Diet. See WORLD WAR: 1914: V. Japan: c. 1914-1918.-Okuma and Terauchi cabinets.Growing desire for more liberal government.In 1914, after the fall of the Yamamoto cabinet, following on a bribery and attempted blackmail incident known as the "naval scandal," Prince Tokugawa "refused to accept the hard rôle of organizing a new cabinet. . . . Viscount Kiyoura, the next choice, willingly accepted the imperial command [but he was unsuccessful in organizing his cabinet, and resigned]. It became manifest that the political situation had undergone a radical transformation and that the power of the press

and public opinion had at last got control of national politics to a great extent, so that even the elder statesmen were no more the sanctuary of political institution in Japan. The elder statesmen were extremely surprised at the failure to organize the Kiyoura Ministry. After a careful scrutiny they failed to find any other clan statesman or other bureaucrat who was sufficiently popular to control the situation, and, discouraged and embarrassed by attempts, they were at last obliged to appeal to Marquis Okuma, who had been isolated from ministerial politics for a long time. . . . The public looked upon this great old man as their savior at a critical time. Inspired by this recognition, the man of eighty at last emerged from his long seclusion at Waseda and became the champion of the popular form of government. . . . Premier Okuma himself did not prove to be a practical statesman, although he was a great idealist and perhaps the most popular leader of public opinion. . . . Regardless of the mistakes committed during its administration, however, [notably its harsh diplomacy in 1915 in the treaty negotiations with China] the Okuma Cabinet always enjoyed the support of the majority of the newspapers. Thus, with the help of the press, and also because of the serious international situation connected with the Great War, the Cabinet survived for three years, a long life for a Cabinet in Japan. At the end of that time the public tired of its mediocre administration, and the Terauchi Ministry, a reactionary bureaucracy, replaced it. . . . The Terauchi Ministry did not make any particularly serious blunder; but the day for a distinctly bureaucratic government had already passed, and the people could not be contented with it. During the last decade the general atmosphere of Japan [had] grown distinctly democratic, especially since the outbreak of the Great War. The people have begun to seek a more liberal government than that of the past. In view of this, Count Terauchi at last resigned; and on September 29, 1918, the Hara Cabinet was organized on a purely party basis with members of the Seiyu-Kai."-K. Kawabe, Press and politics in Japan, pp. 148, 149, 152, 164.

1914-1918.-Military power.-Army organization. See WORLD WAR: 1914: V. Japan: a; MILITARY ORGANIZATION: 35.

1914-1918.-In the World War.-Declaration of war. Services in the war. "When Great Britain declared war against Germany, Japan, in compliance with the Anglo-Japanese Alliance, addressed an ultimatum on August 15, 1914, in which it was stated that all German warships should withdraw from Japanese and Chinese waters and deliver up Kiaochau, which would be eventually restored to China. As no reply was given, Japan declared war on August 23."-F. H. Davis, Japan, p. 287.-For Imperial Rescript, see WORLD WAR: 1914: V. Japan: b.-"The Japanese troops and their fleet lent invaluable help in the protection of trade, a fact which was recognised by a special despatch, dated October 22, 1914, from the First Lord of the Admiralty to Admiral Yashiro, the Minister of Marine at Tokio. On November 9, the fall of Tsing-tau, the capital of Kiao-chou, was reported, whereby German power ceased to exist in the Far East."W. Crewdson, Japan our ally, p. 31.-"Owing to the strong pro-German feeling among the military and civil Bureaucrats in Japan, the German Government hoped to have Japan abrogate the Anglo-Japanese alliance and come in on her side. In fact at the beginning of hostilities a favourable

JAPAN, 1917

demonstration was made before the Japanese Embassy in Berlin on the rumour circulating that she had actually done so. Fortunately for the Allies, however, Japan decided to live up to her treaty obligations. . . . [In Asia her movements were] as follows: (1) The capture of Tsingtau and the seizure of the surrounding portions of the Shangtung Peninsula; (2) the capture of the German island possessions in the Pacific; (3) the guarding of the Pacific; and, finally (4), the Siberian expedition."-W. M. McGovern, Modern Japan, p. 209.-See also WORLD WAR: 1914: V. Japan: d; IX. Naval operations: g; g, 3.-"In the single year of 1915 Japan supplied Russia with munitions to the value of $100,000,000. Of rifles alone Japan shipped no less than 750,000, a number sufficient to arm fifty-two divisions. Upon the fall of Warsaw in August of that year, Japan redoubled her energies in producing arms and munitions for Russia. Without this prodigious effort on the part of Japan, Alexeieff could not have conceived or Brusiloff carried out the superb offensive which began on June 4, 1916. . . . In addition to naval assistance to her allies, Japan placed at their disposal a large fleet of merchant vessels. In April, 1918, she agreed to turn over to the United States sixty-six ships aggregating 514,000 tons. Of that number twenty-four ships, with a total tonnage of 150,000, were immediately chartered by the American Shipping Board. this transaction the Japanese Government had to pay Japanese ship owners $9,000,000, representing the difference between the inter-allied charter rates and the rates paid by the Shipping Board. Even before this agreement was made no less than fifty Japanese steamers had been chartered by various foreign governments and individuals. Japan's financial contribution to the winning of the war must perforce be small, for she is a poor nation. Yet her loans to England amount to $265,000,000. To France she advanced $77,500,000 and to Russia $127,000,000. To this should be added $110,000,000, representing Japanese foreign loan bonds and company debentures redeemed in foreign markets."-K. Kawakami, Japan and world peace, pp. 16-17.

In

1914-1921. Effects of World War on shipping.-Trade relations with India.-Exportation of sugar as compared with that of Formosa. See COMMERCE: Commercial Age: 19141921; INDIA: 1912-1922; FORMOSA: 1906-1919.

1915 (January).-Japan's twenty-one demands from China.-Violation of Japan's Monroe Doctrine. See CHINA: 1915; MONROE DOCTRINE: Japan's Monroe Doctrine for Asia; U.S.A.: 1907

1917.

1916.-Represented at Allied economic conference. See WORLD WAR: 1916: XII. Political conditions in belligerent countries: a; TARIFF: 1916.

1916.-Peace proposals.-Peace note of December 12.-Allied reply to Central Powers.Allied reply to President Wilson's peace note of December 18. See WORLD WAR: 1916: XI. Peace proposals: b, 2; b, 3.

1916.-Interest in China. See CHINA: 1916

1917.

1916 (July).-Russo-Japanese treaty for maintenance of peace in the Far East. See RUSSO-JAPANESE TREATY.

1917.-Effect of Burnett Act in United States upon Japanese emigration. See IMMIGRATION AND EMIGRATION: United States: 1917.

1917 (November).-Lansing-Ishii agreement with the United States concerning China. See U.S.A.: 1907-1917; CHINA: 1917 (November).

1917-1918.-Interest in Philippine islands. See PHILIPPINE ISLANDS: 1917-1918.

1918.-Japan in Siberia.-Secret agreement with China. "In the military intervention of the Allied and Associated Powers in Siberia Japan took a prominent part. The course of events in Russia after the revolution caused uneasiness in Great Britain and France. When the Bolsheviks gained control of affairs, the German and Austro-Hungarian prisoners of war, who, owing to the disintegration of the former Russian armies had regained their liberty, and were free to uphold German ambitions, made common cause with them; and it was felt that there was danger of these combined forces spreading through Central and Eastern Siberia. How best to meet this danger, and at the same time to relieve the Czecho-Slovak troops, composed of ex-prisoners of war, who had refused to join the Bolsheviks and were retreating along the Trans-Siberian Railway, was a question which forced itself on the attention of the Governments concerned. The idea of sending an expeditionary force for this double purpose was first mooted in the summer of 1917, but it was not until a year later that an understanding was effected. In this military intervention six of the Allied and Associated Powers were represented, Japan, owing to her nearness to the scene of action, being the first to place troops on the spot. Meanwhile, in view of the same danger and for the same objects, the Japanese and Chinese Governments had some months before (in May, 1918) concluded a secret military Agreement for Common Defence for the duration of the war, by which arrangements were made for the co-operation of Japanese and Chinese troops both in Chinese and Russian territory. In the following September 'detailed stipulations' were attached to the Agreement. One of these provided that Chinese troops when operating in Russian territory should be under the control of a Japanese commander. A similar Naval Agreement was concluded at the same time. In pursuance of the Military Agreement considerable Japanese and Chinese forces were mobilized and employed in operations in Chinese territory and across the Russian border."-J. H. Gubbins, Making of modern Japan, pp. 281-282.-See also WORLD WAR: 1918: III. Russia: c; e; e, 2; SIBERIA: 1917-1919; CHINA: 1918.

1918.-Exportation of opium to China.Profits. See OPIUM PROBLEM: 1918.

1918. Represented at London and Paris scientific conferences. See INTERNATIONAL ORGANIZATION OF SCIENTIFIC RESEARCH.

1918.-World War casualties. See WORLD WAR: Miscellaneous auxiliary services: XIV. Cost of war: b, 3.

1918 (September).-Peace proposal of Austria-Hungary. See WORLD WAR: 1918: X. Statement of war aims: k.

Armistice

1918 (September-November). terms with Bulgaria, Turkey, Germany, and Austria-Hungary. See WORLD WAR: Miscellaneous auxiliary services: I. Armistices: c; d; e; f; also 1918: XI. End of the war: a.

1918-1921.-As one of the great world powers. Character of the bureaucracy.-"Genro."Electoral reform.-Rice riots, August, 1918.Industrial and political unrest. The internal history of Japan following the war is the history of every one of the victorious nations-an era of inflation, profiteering, and industrial unrest, followed by financial depression. The special character which this took in Japan was due to the singular union of all industrial and political power in the hands of the government. For the encour

agement of industry and commerce, from the first introduction of western ways, the government committed itself to a policy of what may be termed imperial socialism. "If Imperial Socialism means co-ordinated unification of industry more or less under the supervision of the Government, we may begin by saying that control is exercised in two different ways and with consequently two different results. The first of these is by methods of legislative regulation, and is to be seen in the elaborate codes which have been formulated to regulate in detail the exact conduct of all industries and trades, compared with which all English and American laws are as nothing. The farmer with his agricultural code is told exactly what he may and may not do-how his fields must be cultivated, what conditions are prohibited, and along what lines he is encouraged to go. The Government runs experimental stations and informs him as to the best lines to be pursued. Most of this advice he is more or less compelled to carry out. The trader and the manufacturer are, along their respective lines, the same, so that the Government stands as the great umpire insisting upon mutual application of those principles which are supposed to stand for efficiency and success. Government action by no means stops here, for we find that the second method adopted is by actively engaging in the organization of each particular industry, for..ing companies under its own auspices, stimulating the manufacture of this and of that product, arranging and insisting upon mutual co-operation among the principal industries on all important points, and, in fact, acting generally as manager of the drama of economic life.... In most cases all important concerns started as absolute Government monopolies, generally as State experimental factories, and were only gradually and under certain conditions handed over to private enterprise. Thus, in the early days, we find Government factories were started for the manufacture of cement, of paper, of steel, of matches, of printing type, of textiles, of silk, and the preparation of such things as salt, sugar, tobacco, and camphor. The Bureaucracy inaugurated iron foundries, and machine shops, docks, and printing plants, shipbuilding plants, railroad stock manufactories, and all the thousand and one other features of industrial life. In each and every case of this type the factories were kept in Governmental hands until the experimental stage was over, and until it was shown not only that it was a practicable idea, but also that the best means had been devised for their most convenient, economic, and efficient production, and only then, one by one, suitable companies were organized under Government auspices for the acquirement of the industry concerned. . . . As things are at present, we may divide all the important industries into three classes-viz.: Government monopolies, (b) semi-monopolies, (c) autonomous concerns under the general supervision of the Government. Under the first head would come those affairs which are vested solely in the Government and in which private enterprise has no part whatsoever. Such are the railroads, the manufacture and sale of tobacco, salt, camphor, and in Formosa of opium. These are still run for the purpose of securing revenue, and on the whole have proved successful, though the charge of Government profiteering is not altogether unjustified. Under the second category come those firms which, while not mere Government departments, yet are subsidized by the Government, and given general protection and encouragement in return for submission to the broad outlines of its policy. On smaller and less important points they are of course left free to

(a)