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By G. C. Allen

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24 Naturally these changes caused economic dislocation. The silk-weaving trade suffered through the rise in price of its ra w material, and the producers of cotton textiles were damaged by the influx of foreign goods. Many of the farmers, however, benefited as a result ofthe expansion ofthe foreign demand for raw silk and tea. Capital began to flow into Japan from abroad not merely through the loans raised by the Shogun and daimyo but also through the financial activities of foreign merchants who now settled in Japan.

The danger from abroad obliged the Government to incur heavy expenditure for improving the national defences and for maintaining diplomatic representatives. Moreover, it had to pay large indemnities to foreign States for outrages on their nationals committed during periods of anti-foreign feeling. 17 Meanwhile, feudal society in the provinces was breaking up. The maintenance of hordes of idle retainers absorbed a large share of the daimyo's revenue, while the sankin kotai proved to be an increasingly heavy burden as the lords vied with each other in conspicuous expenditure at Yedo.

A blow was given to the merchants' privileges by the decrees of 1831 and 1843 which abolished all forms of guild. The immediate result ofthis step, however, was to disorganize economic life still further; for the abolition of the guilds involved the destruction of the credit system that rested on the kabu, or membership privilege. The disorganization was so serious as to compel the Government in 1851 to make some attempt to revive the guilds in a modified form. But since the number of shokunin had by then greatly increased, it was not possible to restore the monopolistic privileges which the guilds had enjoyed, and they were finally swept away during the next few years.

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