— 9 ~ 



The state of affairs in Brazil is best illustrated by the report of 

 the Commercial Expert at the German Consulate-General at Rio de 

 Janeiro, according to which the value of the imports since the year 190 1 

 has increased by 55,3%, that of the exports 3o°/ . Whether and 

 in how far the import duties which have lately been taken in con- 

 templation, will also affect the importation of our goods, is for the 

 present an open question. 



With regard to the Far East, the sensational news which has 

 recently reached us from America, of the imminent introduction of 

 the gold standard in China, has no doubt excited a lively interest, 

 but in view of the enormous difficulties connected with the conversion 

 of a country without a standard into one with a gold standard, the 

 report does not meet with much credence. For the present at least 

 it would seem that a change in the Chinese financial situation is out 

 of the question. 



The favourable situation in Japan, to which we referred in our 

 April Report, has unfortunately not lasted long, for the period of 

 economic development after the Russo-Japanese war, which brought 

 with it, as a secondary symptom, a time of wild speculation, has been 

 followed already in the first months of this year by a severe reaction 

 in the form of an enormous fall in the Stock Exchange quotations. 

 Characteristic of Japanese enterprise is the fact, mentioned by the 

 Osaka AsaJii that between July 1905 and the end of 1906 no fewer 

 than 3336 new companies with a capital of 605 1 / 2 million yen have 

 been formed, whilst 580 existing companies increased their capital by 

 246 million yen. With the mania for speculation which permeates the 

 whole people, shares came into the hands of small folk, exactly as at 

 the time of the bubble -companies in Germany in the seventies, and 

 senseless inflation led to an unhealthy state of affairs which could 

 only end in a collapse. A large proportion of the newly floated 

 companies has again disappeared from the face of the earth, but it 

 will be some months before the confidence in the banks which have 

 been engaged in these enterprises, and in the various affected branches 

 of industry themselves, is restored. In consequence of this, the desire 

 to buy of Japanese consumers has fallen off to a not inconsiderable 

 extent, and it was now and then difficult to induce the purchasers 

 to carry out their engagements to take up the goods contracted for. 



In the early part of June great alarm was caused by a Govern- 

 ment decree, requiring that all drugs and pharmaceutical preparations 

 which had been examined according to the Pharm. Japon. II. and 

 had been provided with the corresponding seal, should pass into 

 consumption before the December 31, 1907. This step caused a 

 downright panic in the drug market, as, owing to the extreme slack- 

 ness of trade, large stocks had accumulated in the hands of all 



