Culture : In Japan, It’s Time to Celebrate the Dead : * Tales of ghosts and goblins have a strong impact on the country during the <i> O-bon </i> festival.

In 17th-Century Edo, as Tokyo was once known, it is said that the kind and wealthy but pox-scarred daughter from the samurai house of Tamiya married a handsome but penniless and unscrupulous drifter.

In an elaborate scheme to chase away his ugly new wife and marry his beautiful lover, the young man reduced the family to poverty through a series of trumped-up gambling losses. Much of the town’s rich joined in the scheme, under which the supposedly debt-laden husband’s honor was at stake. The ever dutiful wife, to pay her husband’s imaginary debts and save his honor, agreed to be sold off to a cheap brothel, where she was chained down and tortured for refusing to serve customers.

When she learned of her husband’s betrayal, the Lady Tamiya, in a fury, cursed all those involved and threw herself into a nearby canal. Soon the community was haunted by images of the woman, her long black hair only partially concealing her disfigured face. And one after another the schemers went mad, mistakenly decapitating their wives and children with their swords and otherwise dying horrible and mysterious deaths.

A shrine later dedicated to Lady Tamiya substantiates the basic facts of this tale, which is dramatized here each summer in Kabuki plays and television dramas--part of a Japanese tradition of telling horror stories guaranteed to send chills down your spine on a hot summer night.

The stories have a powerful impact on a society where tradition, religion and modern ritual have created a national psyche in which the world of the dead--of spirits--meshes with the world of the living.

Throughout July and August, towns all over Japan celebrate O-bon, the festival of the dead. The Japanese light candles around the home to welcome ancestral spirits, and place food on family altars to feed them. After a few days’ visit, the spirits are sent on their way--symbolized in the countryside by thousands of lanterns that are left to float on rivers or lakes.

In urban Japan, O-bon also means traffic jams as families clog the highways returning to their hometowns. But many Japanese remain fervent believers in the world of spirits. All year round, fortune tellers huddle around small lamps on nearly every block in popular night districts, predicting horrible fates as often as happy tidings.

Dempo-in, a pseudo-religious group, recently sent out flyers in the fold of the Asahi Shimbun, one of Japan’s largest dailies, reminding readers that it was time for spirits to be arriving home. “The spirits may be getting in the way of your good luck,” said the flyer, which offered consultations and cures for everything from bad grades in school to bad bosses at work.

“The World of the Unknown,” a midsummer television series watched each day by millions, dramatizes “real life” stories of the supernatural, picked from a pool of hundreds of samples submitted by loyal viewers. In one, a woman possessed by the vengeful spirit of a dead acquaintance tried to kill her husband with a butcher knife. She suddenly returned to normal when an ancestral tablet from the family “kamidana” or altar, fell between them.

“The ancestral spirits intervened just in time to rid the woman of the evil spirit,” explained Iwao Niikura, director of the Japan Psychic Science Assn. and a regular panelist on the show who frequently reminds viewers of the importance of taking good care of ancestral spirits. He appears along with two actors, a novelist and a singer seated behind a rounded counter that floats above a cloud of dry ice. The backdrop depicts a dungeon in a cave.

The setting may seem overdone, but the show’s producer, Ikuo Nagasawa, says: “Once you report on these events, you come to believe them.” He says his camera crew constantly finds its equipment malfunctioning mysteriously, or its film recording strange, unidentifiable shadows when it travels to graveyards and “suicide forests” where ghosts have been seen.

Nagasawa says he and the 40 to 50 reporters, cameramen and panelists who work on the show visit a shrine at the beginning of each season to ask the gods’ forgiveness for “interfering in the world of the dead.” After the season, they return to the shrine to cleanse themselves.

Niikura, the psychic, says he suffered a high fever when he failed to cleanse himself after a trip to a suicide site. Doctors couldn’t seem to cure him, but a medium, who said he was infected by the spirit of the victim, brought him back to health with appropriate prayers, Niikura adds.

Japanese tradition is steeped in spirit myths and legends. Carpenters believe wood spirits will rebel unless their orientation in a cabinet or piece of furniture remains the same as it was in the tree from which they came. Construction workers won’t lift a hammer until the site of a new skyscraper is blessed by Shinto priests.

Japanese villagers hold that the flat-headed, sake-loving water spirit, the kappa, will fool unwary women and impregnate them. As recently as 50 years ago, babies believed to be born of these kappa were often burned to death.

Shigeru Mizuki, a famous illustrator who has traveled around Japan talking to villagers and put together what is probably the largest collection of Japanese ghost stories, recalls his grandmother telling him such tales while sitting outside their country home to catch the evening breeze. He claims he has come across dozens of spirits and has spent so much time with this other world that “I am half ghost myself.”

But Mizuki says modern Japanese have lost much of their native ability to sense the spirit world, and even the “cooling effect” of chilling ghost stories on dark summer nights is disappearing as Japanese spend their time in air-conditioned, well-lit rooms.

Japan’s animistic tradition, however, has survived as a strong part of Shinto and Buddhist religious rites.

A man’s spirit, for example, is believed to wander for 33 years after death. During this period, and particularly during O-bon, his family is expected to feed and pray collectively for his spirit. (After 33 years, a spirit is said to lose its identity and join the larger body of ancestral spirits.)

If relatives visit the graves of their dead and inscribe the names of the deceased on a tablet in the family altar, it is believed these spirits will protect the family.

Funeral rituals reinforce the sense of family but also inject a sense of the supernatural. A spirit, for example, is believed to reappear at funerals in the form of an insect, and family members can often be seen anxiously following the path of a fly or mosquito during a ceremony.

Unlike the ancestral spirits, yurei , or ghosts in human form, are almost always out to seek revenge. “Try mistreating and killing a woman,” says Yasutaka Teruoka, author of a recent book on the history of Japanese ghosts. “Then you will get a chance to see a yurei. “

Teruoka says ghosts most frequently take the form of women or the elderly, because those groups have been most ill-treated in Japanese society and have had no way under social rules to get even.

“People come to me and say they’ve seen a yurei at the foot of their bed and ask me to do something about it,” says Shoshin Hashimoto, a Buddhist priest of the large Jodoshin sect, which discourages belief in spirits. “No matter how much I explain, I can’t change their thinking.” He says many go to Shinto exorcists who pray and perform various rituals that can include beatings to rid the body of evil spirits.

“The Japanese don’t want to take responsibility, so if their company goes bankrupt or they (do something bad) they want to blame something else,” says Hashimoto.

And even the most skeptical Japanese need little more than a nudge to sink back deeply into the well of superstition.

A Japanese journalist who was facing numerous health problems went to a seer on a whim. The seer told her she had been jinxed because when she recently found a new home she moved in a northeasterly direction--toward the “gate of the devil.”

The journalist no longer dismisses the world of spirits and is now considering moving again.