Such was the industrially revolutionized West which confronted an East
as backward and stagnant in economics as it was in politics and the art
of war. In fact, the East was virtually devoid of either industry or
business, as we understand these terms to-day. Economically, the East
was on an agricultural basis, the economic unit being the
self-supporting, semi-isolated village. Oriental "industries" were
handicrafts, carried on by relatively small numbers of artisans, usually
working by and for themselves. Their products, while often exquisite in
quality, were largely luxuries, and were always produced by such slow,
antiquated methods that their quantity was limited and their market
price relatively high. Despite very low wages, therefore, Asiatic
products not only could not compete in the world-market with European
and American machine-made, mass-produced articles, but were hard hit in
their home-markets as well.

This Oriental inability to compete with Western industry arose not
merely from methods of production but also from other factors such as
the mentality of the workers and the scarcity of capital. Throughout the
Near and Middle East economic life rested on the principle of status.
The Western economic principles of contract and competition were
virtually unknown. Agriculturalists and artisans followed blindly in the
footsteps of their fathers. There was no competition, no stimulus for
improvement, no change in customary wages, no desire for a better and
more comfortable living. The industries were stereotyped; the apprentice
merely imitated his master, and rarely thought of introducing new
implements or new methods of manufacture. Instead of working for profit
and advancement, men followed an hereditary "calling," usually hallowed
by religious sanctions, handed down from father to son through many
generations, each calling possessing its own unchanging ideals, its
zealously guarded craft-secrets.

The few bolder, more enterprising spirits who might have ventured to
break the iron bands of custom and tradition were estopped by lack of
capital. Fluid "investment" capital, easily mobilized and ready to pour
into an enterprise of demonstrable utility and profit, simply did not
exist. To the Oriental, whether prince or peasant, money was regarded,
not as a source of profit or a medium of exchange, but as a store of
value, to be hoarded intact against a "rainy day." The East has been
known for ages as a "sink of the