In the making of a nation its commerce must be fostered and facilities given for the legitimate expansion of all branches of trade, since it is in proportion to the prosperity of its industries and resultant wealth that its political influence will in the main be appreciated. Baron Shibusawa’s career has been essentially that of a business man, for although he occupied at one time a prominent position as an official of the Finance Department, and ranked next to Count Inouye, circumstances ordained that his energies should be applied to tasks more or less directly associated with commerce and the financial progress of his country. If it may be said that the Bank of Japan (Nippon Ginko) owes its existence to Count Matsukata, the First National Bank (Dai-ichi Ginko) was established by the efforts of Baron Shibusawa. Eichi Shibusawa was brought up in the metropolitan province of Musashi, having been born in the village of Chi-arai-jima, in the county of Hanzawa, about forty-five miles from the capital, in 1840. The village is one of many in that region whereof the population is occupied partly in sericulture and substantially in agriculture, millions of cocoons being annually produced in the cottages of the husbandmen, and a great variety of crops gathered from the fields, including some indigo. The Shibusawa family was concerned with both these industries, and had been so for generations. Saitama district, indeed, which comprises in great part what was formerly the province of Musashi, was in the days of the Shogunate, like the neighbouring districts to the west and north, devoted to the rearing of the silkworm, and for the reason that good paddy land is scarce thereabouts a large percentage of the inhabitants still regard sericulture as their most profitable occupation. The industry dates in Japan from the fourth year of the Emperor Chuai’s reign, corresponding to A.D. 195, when a Chinese prince named Koman went over to Japan and was naturalised there, at the same time introducing the Chinese species of silkworm, which from that period was largely cultivated in the Japanese empire. In 283 A.D., while the Emperor Ojin sat on the throne (he was deified as Hachiman, the god of war) a number of Chinamen settled in Japan and taught silk-weaving, the Court itself taking great pains to encourage the industry, by causing mulberry-trees to be planted, and rearing the worms. The taxes were then paid to some degree in silk fabrics. At a later date silk raising and weaving had grown to be the principal productive industry of the country, and was almost universal, though some regions were especially famous for the quality of the output, among them that which is to-day known as Saitama Ken. During the “age of wars” which lasted from the middle of the tenth century to the beginning of the seventeenth, the work could only be carried on in secluded and out-of-the-way places comparatively free from the ravages of fire and sword.

Under the Tokugawa regime the prosperity of sericulture revived, for the feudal chiefs were anxious to see their people engaged in settled occupations, and recognised the value of this industry in particular.

Throughout that region in which Baron Shibusawa spent his boyhood the silkworm is an object of the keenest interest to the people, for everything hinges upon its preservation in a good state of health, and at certain stages of the worm’s existence it is regarded, even at the inns where travellers have to put up for the night when on the road, as a creature whose interests it is necessary to study far more carefully than those of a guest. The “Kaiko-sama” must on no account be disturbed. Shibusawa Eichi received the rudiments of education at his home, and was a close student of history. He read the Chinese classics with a scholar residing in an adjoining village, and helped his father in the manufacture and sale of indigo. By the time he was nineteen years old the cry of Jo-I (Out with the barbarians) which then was being raised in Yedo, little more than a long day’s tramp away from him, had penetrated to the remote village in which he dwelt, and by degrees the whole region grew to be in an uproar. Shibusawa soon betook himself to the capital, to see for himself what it all meant. There he continued his studies under the famous Gyo-son Kai-ho, a classical scholar of repute, and he was a pupil of the no less celebrated fencing master, Chiba Shusaku. From Yedo he travelled to the then seat of learning, Kioto, where he made many friends and finally was received into the Hitotsubashi clan, one of the branches of the Tokugawa family, and from which the last dynasty of Shoguns sprang. The Hitotsubashi branch was that into which the present Prince Tokugawa Keiki, “the last of the Shoguns,” was adopted,—though really a scion of the Mito house—and whose name he bore in the days immediately antecedent to the Restoration of Imperial Rule. The head of the Hitotsubashi house when Shibusawa owned allegiance to it was a very distinguished nobleman, who was instrumental in founding a modernised military system for the Tokugawas and did good service in connection with its finances. Soon afterwards Prince Keiki was called upon to succeed Iyemochi as Shogun at Yedo, and removed thither from Kioto, taking with him Shibusawa Eichi, who became an officer of the Shogunate Government or “Bakufu.” In 1867, the prince Mimbu-taiyu, a younger brother of the Shogun, was sent to France to study Western sciences and institutions, and in his suite was Shibusawa, at that time twenty-seven years of age. The opportunity was one of which he availed himself to the uttermost, and he diligently acquired all the information possible on matters that it had been his main ambition to know more about, passing no inconsiderable portion of his time in England. His stay in Europe lasted until the close of 1868, and he reached home only to find his former chief, the Shogun Tokugawa Keiki, taking up his residence in retirement at Shidzuoka, in Suruga province, 100 miles from the capital. The Restoration had been effected a few months previously.

Shibusawa received the appointment of Chief treasurer of the Shidzuoka household, under the prince Kamenosuké, who had been installed as chief of the clan, and who is now the President of the House of Peers. In this post Shibusawa found ample employment in rearranging the finances of the Tokugawa family, but he presently relinquished it on being made tax controller in the department of Finance under the newly formed Imperial Government at Tokio. In the same service he was next promoted to be Assistant Vice-minister of Finance, and also Chief Inspector of Trade, and in the performance of his duties in these offices he supervised the establishment of several joint-stock enterprises, the first of their kind undertaken in Japan. The members of these companies were merchants of Kioto and Osaka, and their enterprises extended to shipbuilding, land reclamation, etc.; the joint-stock principle thus early in the history of New Japan having begun to find favour. Soon afterwards Shibusawa was appointed Junior Vice-Minister of Finance to Inouye Bunda, as he then was—the present Count Inouye—and in 1873 both resigned in consequence of their views relative to the apportionments to different departments of the public service in the budget estimates not meeting with the support of the Ministry headed by Prince Sanjo Sanetomi. Count Inouye subsequently resumed his place as Vice-Minister of the department but Shibusawa Eichi retired altogether from the Government service, and applied himself to commercial pursuits.

Prior to the Restoration Japan possessed no institutions exactly corresponding to the modern bank. There was what was termed a “rice bank” which advanced rice to the retainers of the Shogun, and this, it is declared, dated back at least as far as the days of Iyemitsu, in 1724. The plan of operations was for certain business houses in Yedo to receive the grain as it came from the domains under the direct control of the Shogunate, and to distribute it among the Shogun’s officers in remuneration for their services. In this way the houses in question were often called on to advance sums on account of the forthcoming crops, the liabilities of the retainers to be met out of the proceeds of the grain when received from the farmers and sold. Needless to say, the normal condition of many of the samurai was one of indebtedness to the “rice banks.” When, in 1870, the present Marquis Ito was authorised to proceed to the United States to investigate financial affairs in America, especially with respect to the public debt, banking, and the monetary standard, he aroused extraordinary interest by his report on the National Bank Act of the United States, a copy of which he sent to Tokio for perusal. The need of some such system was much felt in the then existing crisis in monetary matters, and though the proposal made at that time could not be adopted in its entirety, the financiers were led to consider the advisability of setting up a bank on those lines in the near future. The reception of the idea was quickened by the cumbersome method in vogue of paying taxes in rice, a plan which not only caused delay, but resulted in loss owing to difficulties attendant on the transport of large quantities of grain from places at a distance. The question arose, should the tax be still paid in rice or in legal currency according to the market price of the commodity? If it were allowable to pay in money, then there ought to be some institution at which rice could be exchanged for ready cash. The necessities of the hour pointed to a bank as the medium which must forthwith be established.

But there was another thing that made the notion additionally attractive, and this was the position of the country’s finances in respect of the inconvertible paper currency termed “Da-Jo-Kwan Satsu”—notes issued by the Government, which were depreciated, though not to any great extent so far, and it was deemed unwise to keep them floating so long as thirteen years, the period assigned for their redemption. It had been ascertained that the United States had established a National Bank to facilitate the management of the inconvertible notes issued at the time of the Civil War, known as “Greenbacks,” and the similarity of the situation at the moment in Japan to that of America in 1860 struck everyone.

Messrs Inouye and Shibusawa, then together in the Finance Department at Tokio, cordially agreed with the proposals of Ito Hirobumi, as conveyed in his reports from America, and began to take the needful steps for establishing a National Bank of Japan on a small scale. Mr Shibusawa was made Chairman of a Committee of Investigation into the system of national banks, and after careful study the Committee framed regulations which were put into force by the Government under the National Bank Act in November 1872.

The Dai-Ichi Ginko, lit.: No. 1 Bank, prospectus appeared in December 1872, the proposers—two of them members of the renowned house of Mitsui, two of the firm of Ono, and Minomura Rizayemon, five well-known men, subscribed 2,000,000 yen, and offered 1,000,000 yen for public subscription. It illustrates the change which has come over Japan in more recent years that, notwithstanding every effort, in 1873, when the list closed, only 4408 shares had been taken in the new venture, and the capital of the bank was reduced to 2,440,800 yen, equal at present rates to about £250,000 sterling. The public had not sufficient understanding of the corporation system to be able to appreciate the new enterprise. A few years later the joint-stock concerns were numbered by the hundred. The Dai-ichi Gin-ko began business on the 20th July 1873, in the picturesque block at Nihonbashi, in Tokio, which had belonged to the Mitsui Company, and had been bought from them for 128,500 yen, and it continued thenceforward to transact a general banking business, and to act as accountant of the Finance Department, for at that time every department of the Government had its own accountant and kept its own independent set of accounts.

Mr Shibusawa,—as he was then,—on resigning his post of Junior Vice-Minister of Finance, was elected General Superintendent of the Dai-ichi Gin-ko, and discharged the duties of president.

Speaking some time ago of those early days of banking in Japan, the Baron explained that “It was the 1st day of August 1873 when the First National Bank received the certificate of authorisation. From that time we issued the new bank-notes for circulation, little by little, but there were none who came to make demands for the redemption thereof. It was our idea to have them circulated in the country districts rather than in the cities and open ports. The people of the country districts, although they were very unfavourably impressed by the old Government paper, were now better disposed to circulate the notes issued by a bank under strict Government inspection, and the general public began to put more confidence in these notes than in those which had been issued before. But we were very careful not to put too many of them into circulation, because we were well aware of the possibility of fluctuation in the price of gold and silver that would seriously affect the value. So, at first we kept back a large quantity of the paper in our vaults....” And thus by prudent management the First National Bank passed its first year with a record of 112,000 yen net profit, out of which 11,000 yen were carried at once to a reserve fund.

At the end of 1874 the bank received a severe blow by the failure of the Ono firm, which had been one of the largest shareholders, and owed the bank a considerable sum. At a general meeting it was resolved that the Ono house’s obligation would be met by the shares of 1,000,000 yen which it owned, and consequently the capital was reduced by that amount. Mr Shibusawa was elected first president of the bank, and as the Government had been a little alarmed by the Ono affair, and was determined thenceforward to establish an accountant bureau in each department of State under its own charge, the First National Bank had to hand over all Government moneys left in its control, and seek to extend its business solely among the people. It was believed that no fears need be entertained of the result, and it has, as a matter of fact, done well. In recent years it has been the chief financial organ of the Japan-Korea trade, and has floated loans for the Imperial Household and Government of Korea with complete satisfaction. The Dai-ichi Ginko notes are the recognised medium of circulation in Korea still and are facilitating the commerce of that country.

It was in May 1900 that a peerage was conferred on Baron Shibusawa, and it was the first instance in which such a mark of imperial favour had ever been extended to a business man in Japan, the rank being in his case accorded in recognition of his past services to the State. It was on his initiative, supported by Marquis Ito and Count Okuma, that the Tokio Chamber of Commerce was founded in 1878, with himself as its president, an honour which he still enjoys. He has played a distinguished part in connection with the municipal affairs of Tokio, and was mainly instrumental in establishing an Asylum for the Poor. When at a later date the Tokio municipality abolished this useful institution, he took upon himself the work of raising a fund for an asylum to exist purely as a private establishment, and to be maintained wholly independently of official aid. In the end it was taken over by the municipality, with Baron Shibusawa as its president, and he continues to be the head of the institution, which is the largest and best equipped of its kind in the land.

Before he quitted the Government service in 1873 he had taken the first steps to establish a mail steamship service to China and Korea, and around the Japanese coasts. The Company formed to undertake this work was afterwards amalgamated with the Mitsu-Bishi (Three diamonds) Shipping Company, and subsequently, when another concern was started and a fierce competition arose for the coastwise trade, Baron Shibusawa induced the opponents to make terms with each other and unite in one Company which is now among the great Shipping Organisations of the world, and known as the Nippon Yusen Kaisha, or Japan Mailboat Company. He is still one of its directors, and has helped, moreover, very materially to establish a trans-Pacific line,—the Toyo Kisen Kaisha,—which runs mail steamers from Yokohama to Hong Kong and San Francisco.

In the cotton-spinning industry he is prominent, having founded the Osaka and Miye Spinning Mills, and he has either promoted or started numerous undertakings for the supply of gas or electric light, for silk or cotton weaving, hemp and rope manufacturing, brickworks, cement factories, sugar refining, and many other enterprises for the utilisation of the knowledge which modern science has conferred on his fellow-countrymen. He is deeply concerned with railway extension, not only in Japan but in Korea, he is interested in harbour construction, and reclamation works, in farming, the breeding of horses and cattle, the manufacture of artificial manures, hat-making, and a variety of other ventures that need not be particularised. Altogether, including several banks other than the Bank of Japan of which he is president—e.g. the Yokohama Specie Bank, the Industrial Bank, and the Japan Credit Mobilier—the Baron is connected with upwards of thirty companies in the capacity of either president or director. He founded the Tokio Clearing-House, the Commercial Agency, and other business institutions, and in Korea he has from the outset taken a leading part, the construction of the railway from Fusan to the Capital, and between Seoul and Chemulpo, having been due principally to his efforts. When the railway development of Southern Manchuria is seriously undertaken this line from Fusan to Seoul, and thence to Wiju, is destined to form a link in the long chain of railway communication which will stretch from London to Tokio, with short breaks at the Straits of Dover and the Straits of Korea which divide Fusan from Shimonoseki in South-west Japan. There are incomplete links, notably between the Yalu river and Liao-Yang, but a military line exists, which needs only to be strengthened, so the permanent establishment of that section should present correspondingly fewer difficulties. Ultimately it is to be expected that England will be brought within a fortnight by rail of Japan.

Baron Shibusawa was nominated by the Emperor as a member of the newly formed House of Peers in 1890, when the Imperial Diet was first opened, but he resigned that post a year later, and afterwards occupied the chair of the Higher Council of Agriculture, Commerce, and Industry, and he has served on many commissions appointed by the Sovereign to make investigations on various subjects of importance to the nation.

In the domain of philanthropy Baron Shibusawa’s exertions have tended materially to the establishment and support of schools, orphanages, reformatories, hospitals, and kindred benevolent institutions designed to confer public benefit, on the directorates of which his name is frequently to be found, for he has ever been an active worker in the cause of charity.

In 1902 he again visited England, and was entertained by the London Chamber of Commerce, his speech on that occasion containing the happiest allusions to the growth of commercial relations between Japan and Great Britain. He was able to point with satisfaction to the existence in his own country of no fewer than 2534 banks possessing an aggregate paid-up capital of £35,000,000 sterling. After the Chino-Japan war the number of joint-stock companies rose, as he explained, with phenomenal rapidity, for in 1900 the total number was not less than 6176, and their paid-up Capital amounted to 440,476,000 yen, or over £44,000,000 sterling. The volume of the export and import trade, as he was able to assure his audience, had risen from 50,000,000 yen in 1877 to 138,330,000 in 1890, and 506,160,000 in 1901. Though Japan has since been at war with Russia the volume of her trade for the year 1905 will in all probability show a very appreciable increase over any intervening year, and with the immense commercial activity which she has developed subsequent to the conclusion of peace the figures for the fiscal year ending with March 1907 must inevitably exhibit a degree of progress and an expansion of international trade in which her people may justifiably take the utmost pride.

Speaking as a business man to men of business, Baron Shibusawa proceeded to refer in his speech to the then recently concluded Anglo-Japanese Agreement of 30th January 1902. His remarks may be said to apply with equal force to the extended form of that Agreement entered into on the 12th of August 1905.

The wish to which Baron Shibusawa gave utterance in 1902 is one that finds its echo in the hearts of the people of both nations to-day, and one with which this humble effort to spread a knowledge of Japan and her affairs may fittingly conclude.