bad years having gone before, it had been hoped that in 1909 a revival of trade would be seen. The rice harvest had been a very big one but the consequence was that rice values fell to a lower point than had been touched for many years. At these low prices farmers were not free sellers and their consequent absence as buyers of other commodities had been undoubtedly felt. More than once signs of improvement were not wanting, but the improvement failed to materialise, and the year closed almost as badly as it had begun. Stocks of imported goods, however, had been greatly reduced, but the high cost in producing markets kept new business on a very limited scale.

These remarks, together with the preceding pages of this report, give a fair idea of the situation of trade during the year, but in spite of the somewhat pessimistic views generally expressed with regard to the trade of the port during last year, it is satisfactory to be able to state that, although for the reasons given business was practically at a standstill, 1910 opened with better prospects of an improvement generally, though this may not be of any great extent for some time to come. It is obvious, however, that, with the introduction of the new and distinctly protective tariff impending on the termination of the present treaty between Japan and foreign countries, there will be a re-adjustment of business relations, which will require very careful handling if trade from the importers' point of view is not to suffer.

The following is a general summary of the principal articles of import and export from Kobe, the seven special open ports being dealt with at the end of this summary, and a separate report on the trade.of Osaka being annexed at its conclusion, as in former years.

Imports. Raw cotton.-The imports of raw cotton in 19097,140,9537.-were more by 1,168,3097. than in 1908, but this figure is still below that of 1907 and some 34,000l. less than the average for the last five years. Although the business done in cotton during 1909 was somewhat larger than in the preceding year, it was not so great as in 1907. Among the various kinds of cotton imported into Japan-Indian, American and Chinese hold by far the most important positions. Indian cotton occupies premier place, but the extent to which this, as well as all cottons, is used in Japan depends in a very large degree upon the conditions prevailing in the American market.

Business in American cotton during the year was much restricted, and the total volume shows a decrease on the previous year, 1908, Owing to the great fluctuations. Although the year 1909 opened with the price of "forward" middling at the low rate of 30 yen* (31. 18. 3d.) in consequence of the heavy crop of the previous year, business was at that time being transacted on a somewhat extensive scale, the poor prospects for the new crop later brought about a gradual rise in the rates, which reached at one time the high figure of yen (4l. 15s. 114d.) for "forward" middling. This proved a complete check to business in this cotton, and in consequence the mills in Japan have been exercising great economy in regard thereto. The figures given in the table on page 8 indicate that the imports of this cotton do not show a large decrease as compared with the previous year, but this is due to cheap purchases contracted for during the previous season. During 1909 the imports of Indian cotton, upon which the 28. Old.

47

* 1 yen

=

would

industry in Japan almost entirely depends, exceeded those of the two preceding years both as regards quantity and value. This increase is no doubt due on the one hand to the additional spindles in many of the mills, and on the other hand to the fact that Indian cotton in many instances replaced American and Chinese. Quotations gradually advanced in sympathy with the tendency of American cotton and in view of the fact that the total crop of the previous year was ascertained to be much below the expectations of the market. Notwithstanding frequent reports to the effect that the new cotton crop be heavy, the high prices ruling for American cotton induced the purchase of Indian by European and American markets, the consequence being that there was hardly any decline in quotations; on the contrary, there was at times a tendency to advance. Although most of the Japanese mills failed to secure their cotton at low rates, they contracted forward at the beginning of the year for large quantities at moderate rates, in due course paying higher prices. However, the stocks in the hands of mills being short, "spot" business was fairly brisk towards the latter part of the year 1909. Prices ranged from :

-

A large trade has been done in Chinese cotton for a number of years past, and it is in good demand in Japan owing to its whiteness and freedom from dust, suiting the purpose of the Japanese mills. But the imports in 1909 were smaller than in the previous year, and they have been diminishing year by year of late, as will be seen by reference to the table below. This decrease is due to the fact that the cotton industry is developing in China to such an extent that a large propor tion of the cotton is needed for home consumption; besides which there has been considerable trouble in Japan owing to the alleged intentional moistening of the Chinese cotton, late delivery, &c. These difficulties checked transactions to such an extent that some of the most important mills in this country showed a decided inclination to avoid the use of Chinese cotton altogether.

For the port of Kobe alone the import of raw cotton during the year 1909 compared with that of 1908 was as follows:

Rice. Another large crop of Japanese rice in 1909, exceeding that of the preceding year, restricted the importation of this staple, the

figures of the import having fallen from 550,000l. to 450,000l., being some 850,000l. value less than the average for the previous five years. Owing to the high price which the Japanese staple commands, much of it remained in the country, keeping out the foreign import, whilst there is a far greater consumption of it in the country as an article of daily diet. Metals. Imports.-Metals had already declined by nearly 800,000l. from 1907 to 1908, and in 1909 they showed a further falling-off of over 350,000l., bringing the total down to some 500,000l. less than the average for the preceding five years. The greatest decrease was in bar and rod iron, plates and sheets and sundry forms of mild steel. On the other hand, copper, zinc, tin plates, pipes and tubes, rails and pig iron showed recovery. Pig iron increased by some 18,000 tons in quantity and 14,000l. in value, most of it being Cleveland. The increased demand is attributed to the extensions of the gas and water companies, their requirements in pipes now being largely cast in this country as well as imported ready-made. To a greater extent Chinese pig iron is used for this purpose, but it is found advantageous to mix with it a proportion of British pig, of which advantage is taken as long as the price is not prohibitive. No doubt the trade was materially assisted by the very low rates at which regular liners were carrying pig throughout the year. In special qualities of iron and steel, imports to Kobe have been very small, the principal users being the railways, whose purchases in 1909 were curtailed in keeping with the general finance policy of the Government. Furthermore, whereas the Government railways formerly confined their purchases very largely to British manufactures, there has been of late a tendency to throw open their orders to competition of all countries. The Continental and United States manufacturers have now entered the field, and British manufacturers, whilst still being preferred, will only get business provided they can supply as cheaply as their foreign rivals.

In shipbuilding material, for which this port is usually a good customer on account of its dockyards, the imports have been small in spite of the low price at which supplies were obtainable. This has been due to the stagnation in the shipbuilding trade, noted elsewhere in this report; but there appears now to be a slight improvement.

Although mention was made in last year's report of the Wakamatsu Government Foundry, in respect of its probable power to compete with foreign imports, it would appear that, even reckoning in the duties, foreign imports can still successfully compete with its production. The decrease in the figures of importation cannot be ascribed so much to the effects of local competition as to the fact of the general want of activity in yards and workshops which usually absorb a large share of the import.

Cotton manufactures.-There is a considerable set-back in the import of cotton manufactures. Although the returns for 1908 showed an increase of over 200,0007. on the previous five years' average, there has been a decrease in 1909 of some 186,000l., which has thrown the figures back about 70,0001. below the average. This depression is due chiefly to a decrease in grey shirtings of 112,7221. and in satin piecegoods of 69,3301. Chintzes have recovered about 50 per cent. of their loss of the year 1908.

Woollen manufactures.-Dealers in woollen goods showed great caution at the beginning of the season in making forward contracts, with the result that imports were less than usual. Goods arriving, however, sold easily at fair margins of profit, and there was no heavy stock to carry over. The decrease amounted to over 23,000l. in the total import in 1909 as compared with 1908. Imports of Italian cloths show a falling-off of 20,000l. in value, or 66 per cent., due to the competition of similar Japan-made cloths which can take their place. The import shows a loss on that of 1908 of 66 per cent.

Oils and waxes.-The good showing in this import in 1908 has not been sustained, the figures having fallen from 780,0407. in that year to 497,506/. in 1909, a drop of over 280,000l. in value. Every item shows a decrease; kerosene oil, the largest item of all, having fallen 47 per cent., and accounting, with the exception of about 50,000l., for the whole of the decrease under this heading.

Sugar.-Although there is a slight increase in the value of the import of foreign sugar into Kobe during 1909, there is a very serious fallingoff in the general import into Japan of the foreign article, amounting to more than 30 per cent. of the total for 1908. In February, 1909, the already very heavy taxes on that commodity were suddenly increased by the Government, which was one of the causes of this enormous set-back to the import, whilst it largely confined such consumption as there was to the inferior qualities of sugar. Special Government facilities afforded to Formosan sugar, with the idea of fostering the productions of that island, have had much to do with this. The extraordinary revelations connected with the management of some local refineries also contributed towards the depression. Judging, moreover, from reports received from Formosa, the support given by the Japanese Government to the sugar industry in that island will before long do away with the import of foreign sugar altogether.

Fertilisers. Fertilisers show an aggregate decrease of over 270,000l., but still leaving an increase of over 72,000l. on the previous five years' average. With the exception of phosphate manures, which seem to find favour, the other grades have all shown decreases, especially that of ammonium sulphate, a British product which, with a falling-off of over 230,000l., forms the largest proportion of the decrease under this heading. With the large number of fertiliser factories which have come into existence in Osaka and elsewhere in this neighbourhood, the foreign import apparently stands little chance of increasing in the future.

Drugs and chemicals.-Every item under this heading, amounting in all to 675,8021., shows an increase both since 1908 and on the previous five years' average. This constitutes an increase of 67 per cent. on last year's figures.

Machinery.-In spite of the fact that the imports under this heading decreased 46 per cent., or over 670,000l. (from 1,469,0047. in 1908 to 796,6827. in 1909), it is a little consoling to find that in the returns for electrical machinery the proportion of British to German and American imports has largely improved. British electrical machinery is much esteemed by the Japanese but the merchant has always the same difficulty to contend with, viz., that cheapness is likely to outweigh

In

considerations of quality in the estimation of the Japanese. machinery of other kinds there has been a great diminution of importations, as noted above, due principally to the general depression in business throughout the country.

Many new electric light and tramway companies were started during 1909, to which cause the increase in the imports of electrical machinery is to be attributed, but the boom in that line came to an end with the close of the year. Apparatus and machinery for gasworks have been imported from the United Kingdom to a very large extent, but it is not likely that this extensive importation will be maintained for more than a few years more, a great deal of the "plant" required for such undertakings being now manufactured locally. As in other lines, the general tendency is to penalise the foreign import by heavy duties and to foster the home industries. Machine tools are now being turned out in ever-increasing quantities by Japanese engineers, which presumably satisfy their requirements, although the foreign importer is of the opinion that they are unsatisfactory. They are cheap, however, and experience will show which can command the market. Bicycles have suffered a check in their completely manufactured state, only wellknown makes being imported to any extent, whilst the demand for cheap lines has encouraged the importation of the cheapest British parts for assembling locally, to the exclusion of the finished article. The boom in electric light companies increased the demand for Britishmade electrical wires and cables, which are much preferred to those made in other countries, but once more the preference for cheapness before quality prevents larger sales. There are now many small cable manufacturing concerns working in Japan. Only one of these concerns, however, competes in quality with the imported goods. This factory is equipped with British machinery and has the services of a British cable expert.

Distribution of the import trade.-Annex 3 (A) to this report shows the total British import trade of 1909 for the port of Kobe. This amounted to 9,119,511l. as against 8,627,0097. in 1908, a slight recovery of some 500,000l. or 5 per cent. The import trade from the United States and from Germany showed a decrease of 16 5 per cent. and of 4 2 per cent. respectively. There is a drop of about 1,000,000. in the value of imports to Kobe from the United Kingdom, more than made up for by an increase in the trade from India of nearly 1,600,0007.

Exports.-There was an increase in the total exports of Kobe in 1909 over the previous year of nearly 1,685,000l., the figures having risen from 8,586,7167. to 10,271,2737., being an improvement of some 600,000l. on the preceding five years' average. There was a steady recovery shown nearly all along the line, the items showing the largest increases being cotton yarn and cotton fabrics, matches, metals, tea, camphor and clothing. On the other hand, matting, provisions of all kinds and straw plaits show a decrease, whilst the item of steam and sailing ships is conspicuous by its total absence from the returns for

1909.

Of the total exports to the United Kingdom and to British possessions, which increased in 1909 by 1,887,0651., the United Kingdom claimed a share amounting to at least 1,151,3887., an improvement of