In the eighteenth century, Japan’s feudal overlords, from the shogun to the humblest samurai, found themselves under financial stress. In part, this stress can be attributed to the overlords’ failure to adjust to a rapidly expanding economy, but the stress was also due to factors beyond the overlords’ control. Concentration
of the samurai in castle-towns had acted as a stimulus to trade. Commercial efficiency, in turn, had put temptations in the way of buyers.

Since most samurai had been reduced to idleness by years of peace, encouraged to engage in scholarship and martial exercises or to perform administrative tasks that took little time, it is (15) not surprising that their tastes and habits grew expensive. Overlords’ income, despite the increase in rice production among their tenant farmers, failed to keep pace with their expenses.

Although shortfalls in overlords’ income re- (20) sulted almost as much from laxity among their tax collectors (the nearly inevitable outcome of hereditary officeholding) as from their higher standards of living, a misfortune like a fire or
flood, bringing an increase in expenses or a drop (25) in revenue, could put a domain in debt to the city rice-brokers who handled its finances. Once in debt, neither the individual samurai nor the shogun himself found it easy to recover.

It was difficult for individual samurai over- (30) lords to increase their income because the amount of rice that farmers could be made to pay in taxes was not unlimited, and since the income of Japan’s central government consisted in part of taxes collected by the shogun from his (35) huge domain, the government too was constrained.

Therefore, the Tokugawa shoguns began to look to other sources for revenue. Cash profits from government-owned mines
were already on the decline because the most (40) easily worked deposits of silver and gold had been exhausted, although debasement of the coinage had compensated for the loss. Opening up new farmland was a possibility, but most of what was suitable had already been exploited (45) and further reclamation was technically unfeasible.

Direct taxation of the samurai themselves would be politically dangerous. This left the shoguns only commerce as a potential source of government income. (50) Most of the country’s wealth, or so it seemed, was finding its way into the hands of city merchants. It appeared reasonable that they should contribute part of that revenue to ease the shogun’s burden of financing the state. A means (55) of obtaining such revenue was soon found by levying forced ioans, known as goyo-kin; although these were not taxes in the strict sense, since they were irregular in timing and arbitrary
in amount, they were high in yield. Unfortunately, (60) they pushed up prices. Thus, regrettably, the Tokugawa shoguns’ search for solvency for the government made it increasingly difficult for individual Japanese who lived on fixed stipends
to make ends meet.

1. The passage is most probably an excerpt from
(A) an economic history of Japan
(B) the memoirs of a samurai warrior
(C) a modern novel about eighteenth-century Japan
(D) an essay contrasting Japanese feudalism with its Western counterpart
(E) an introduction to a collection of Japanese folktales

2. Which of the following financial situations is most analogous to the financial situation in which Japan’s Tokugawa shoguns found themselves in the eighteenth century?
(A) A small business borrows heavily to invest in new equipment, but is able to pay off its debt early when it is awarded a lucrative government contract.
(B) Fire destroys a small business, but insurance covers the cost of rebuilding.
(C) A small business is turned down for a loan at a local bank because the owners have no credit history?
(D) A small business has to struggle to meet operating expenses when its profits decrease.
(E) A small business is able to cut back sharply on spending through greater commercial efficiency and thereby compensate for a loss of revenue.

3. Which of the following best describes the attitude of the author toward the samurai discussed in lines 11-16?
(A) Warmly approving
(B) Mildly sympathetic
(C) Bitterly disappointed
(D) Harshly disdainful
(E) Profoundly shocked

4. According to the passage, the major reason for the financial problems experienced by Japan’s feudal
overlords in the eighteenth century was that
(A) spending had outdistanced income
(B) trade had fallen off
(C) profits from mining had declined
(D) the coinage had been sharply debased
(E) the samurai had concentrated in castle-towns

5.The passage implies that individual samurai did not find it easy to recover from debt for which of the
following reasons?
(A) Agricultural production had increased.
(B) Taxes were irregular in timing and arbitrary in amount.
(C) The Japanese government had failed to adjust to the needs of a changing economy.
(D) The domains of samurai overlords were becoming smaller and poorer as government revenues increased.
(E) There was a limit to the amount in taxes that farmers could be made to pay.