Yen for dollars;

              By Charles E. Collins
taken to broaden the capital market is the sale of securities in the United States. Securities of the Japanese com-pany are deposited with a Japanese bank acting as agent for a U.S. bank, and American Depository Shares are then sold to investors in the U.S. These securities must, of course, be registered with the SEC.*
There are two business customs of particular interest that act to deter ex-pansion through equity capital and cause a generally heavy dependence of industry on bank loans. One is the cus-tom of paying out a relatively large portion of profits in dividends. The oth-er is that in raising money through new issues it is common practice to allow present shareholders to subscribe to the new shares at par, even though par is substantially less than market. This lim-its the capital obtainable through each issue, and requires companies to make frequent trips to the capital markets.
On the Kansai engagement, the one with which I was more familiar, we en-countered a number of situations I had not met before. One of these was the absence of customary posting media and the manner in which transactions are tabulated in Kansai's bookkeeping system. Instead of a general ledger as we know it, "accounting slips"—thou-sands of paper forms bound in many books, and each normally representing a single transaction — comprise the
*A recent adverse factor is the proposal by Presi-dent Kennedy to impose an "interest equaliza-tion" tax on new foreign-portfolio investments by United States citizens.
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monthly source of postings. The post-ings are made to a trial balance, not to a ledger. All the details are accumu-lated by clerks using the soroban (the Japanese equivalent of the abacus), and there are no intermediate written ac-cumulations. This lack of audit trail is similar to the situation faced in examin-ing accounts recorded in an EDP sys-tem before obtaining printouts.
Most of the major analyses were pre-pared by the client on work sheets hav-ing side captions and column headings preprinted in both Japanese and Eng-lish. Because of the rather formidable volume of these yellow sheets and the fact that a goodly number of the com-pany's staff worked on them, our audit was characterized as the "Yellow Sheet Typhoon."
The individual Japanese household-er's thrift is legendary. Even for pur-chasing automobiles and houses, many people in Japan save and pay cash. Since most of Kansai's bills are collected within 15 days from the meter reading date, the company's accounts receivable generally amount to only about one-half of a month's billings. Meter readers give each of the almost four-million cus-tomers a note of their consumption of electricity at the time of meter reading, and shortly after each day's bills are prepared, the corps of collectors is back at the customers' doors collecting cash. The system is made easier by the heavy concentration of users, and it works very well indeed.
We had an exacting task in explain-ing to the client all the accounting re-d
quirements of SEC Regulation S-X. This is a difficult job at best in the case of U.S. companies registering for the first time. For Japanese companies it is an even greater problem because of the difficulties of communication. Instead of regarding this as a "language barrier," I prefer to think of it as a challenge to clear expression. Many times I worked through a company interpreter and found that I had to use simple, basic language, that is easy to translate. For example, at a meeting with several cli-ent officials I mentioned that an income statement item should be shown "net of taxes." This puzzled them, and I then realized the term was not directly trans-latable into Japanese. It took several sentences to describe "net of taxes" un-derstandably for my listeners, although of course the concept was not strange to them.
These notes have been put together mostly at odd hours during my stay at Skytop for the 1963 principals' meet-ing. Now, as I finish them in my 30th floor New York hotel room, awaiting the start of a 10,000-mile flight back to Tokyo, I am looking out over huge buildings straining vertically for the sky. Soon I shall be in Tokyo, where I shall see buildings that also are very large. But Tokyo's buildings have low, horizontal lines to conform with build-ing code restrictions designed for pro-tection against earthquakes.
I have become accustomed to change over the past year and a half—change in professional technique, and the stimu-lating change in outlook that comes from living in Japan. A year filled with so much adventure makes me eager to fly west to Japan again tonight, with a short stop at "home" in Hawaii.
a Most of Kansai's hydroelectric plants, unlike this one, are run-of-river type, without storage dams, b Osaka at night. Laced with canals, Osaka is often called "The Venice of the East."
c Mitsui's polyvinyl chloride manufac-turing plant in Portugal, a joint venture, d Japanese farmers wring a high yield from the land, less than 20 per cent of which is suitable for cultivation.
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