Japan's Early Experience of Contract Management in the Treaty Ports by Honjo Yuki Allyson;

Author:Honjo, Yuki Allyson;
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2003-08-15T00:00:00+00:00

Supply, Demand, Contract, and Trust

Clearly both Japanese and Western merchants, at times, had complaints about the other party. The treaty port was sometimes an environment of mutual distrust. In addition to the political and economic instability, the market was untested, the players unknown, and parties could default on their agreements with few consequences. When commodities were limited, contracts were breached, at least in the silk and silkworm egg market. No single social or legal institution could compel either the Japanese or Western merchant to deal honestly with the other. Furthermore, the differences in trade practices were viewed with suspicion by both parties. Only personal affinity, incentive, greed, and profit bound the merchants together.

The high Western demand for the limited quantities of Japanese silkworm eggs focused much attention on the necessity of contractual compliance and trust. The fluctuations of prices in Yokohama tested the patience of the Japanese and Western traders, as well as the agreements made between them. Because of the silk blight in Europe, Western merchants in Japan worked to procure silkworm eggs from Japan to re-seed the destroyed French and Italian silk industry. Initially, the export of silkworm eggs was illegal in Japan, but under Western pressure, this restriction was lifted. The majority of Japanese silkworm species were hardy and reproduced prolifically, thus making them desirable in Europe. Silkworm eggs were sold in ‘cards’; moths were encouraged to lay eggs, about half millimetre in size, onto stiff paper. The silkworm eggs naturally adhered to the paper backing, and the paper was then sold as silkworm egg cards. The eggs came in two types. White eggs, and the finer quality, and therefore more expensive and sought for, green eggs. The eggs would hatch to produce the worms which would eventually produce the silk cocoons. The cocoons were treated and were then reeled for silk thread.

A September 1865 letter in The Japan Times from a Western merchant writing under a pseudonym summarized many of the perceived frustrations of trading with Japanese merchants in this environment, in which contracts were routinely breached.14 In 1865, only a handful of Japanese merchants were licensed to sell the eggs. In the particular instance described in his letter, the unnamed merchant obtained the name of a licensed silkworm egg dealer from officials in the Japanese Customs House. An agreement was reached between the merchants, and bargain money was exchanged. Furthermore, because trade in silkworm eggs was restricted, the signed contract was registered at the Japanese Custom House, and stamped with a Consular Seal – presumably the official British seal. Demand for silkworm eggs was huge. The letter-writer described crowds of Western buyers all waiting at the quayside trying to obtain eggs. In this particular instance, the Japanese seller allegedly defaulted on the contract and sold the eggs to another Western buyer at a higher price, after assuring the initial buyer that he would not do so.

The Western merchant implied in his letter that Japanese merchants and Japanese officials worked in collusion with one another to obstruct trade and the smooth function of contracts.

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