Muneyoshi Yanagi, who is the founder of theories on folk handicrafts, respected Lafcadio Hearn as his predecessor. Perhaps Hearn was the first foreigner who had a high opinion of Japanese folk handicrafts. Hearn had a certain influence on Yanagi, but they differ in their attitudes towards folk handicrafts. The aim of this paper is to discuss this difference. Hearn and Yanagi alike have a distaste for mass-produced industrial arts. Yanagi thinks so highly of folk handicrafts that he goes so far as to personify them. He regards the craftsmen a less important element in the production of folk handicrafts, and insists that a long-established tradition is more essential. Hearn, on the other hand, regards every craftsman as a creative being. He argues that this creativity (of every craftsman) springs from a kind of memory called 'organic memory.' This memory, in my opinion, is a syncretism of Buddhist ideas and the theory of evolution by Herbert Spencer.