Economic Development of Japan

No.3 Meiji 1

Second Arrival of the West and End of Edo• US Commodore Perry and his “Black Ships” came to Edo

Bay and used military threat to open up Japan (1853-54)• Trade with West began under unequal treaties (1858: no

tariff right, no court right), which brought social and economic changes

• Fights over pro- and anti-foreigner forces, and pro- and anti-Bakufu forces began, eventually toppling Bakufu (1867)

M.C. Perry (1794-1858)

Black Ships

Odaiba No.3 (bakufu’s fortified island)

SupportBakufu

Support Emperor

Anti-foreigner

Satsuma Han

Choshu Han

Open door

Meiji Govt

PP.40-42

1862 1865

1866

Hans that produced many leaders(Alternative place names in parentheses)

Edo

July 1853(4 ships)

Feb.1854 (7 ships)

O-daiba (forts)

Perry’s Entry into Edo Bay 1853-54

Yokohama

Uraga

Kurihama

New forts

Signing of Japan-US Friendship Treaty in Yokohama, Mar.1854

• Open ports: Yokohama, Nagasaki, Hakodate, Hyogo, Niigata

• Unequal treaties with West vs. no travel rights for foreigners

• Rise of Yokohama merchants

• Rapid westernization and technology import begin

• Inflation, relative price changes, rise and fall of industries

PP.41-42

Fake color photos of early Yokohama

0% 20% 40% 60% 80% 100%

Export

Import

Silk Tea

Cottonyarn

Cottonfabrics

Woolengoods

Resumed International TradeTrade 1876-80

From UK

To US

Cum

ulat

ive

hist

ory,

Edo

ach

ieve

men

ts,

nati

onal

uni

ty a

nd n

atio

nali

sm

Private-sector dynamism and entrepreneurship

(primary force)

Policy support(supplementary)

Japan’s economic growth was driven mainly by private dynamism while policy was also helpful

Policy was generally successful despite criticisms:--Power monopoly by former Satsuma & Choshu politicians--Privatization scandal, 1881--Excessively pro-West--Unfair by today’s standard

Rapid industrialization esp. Meiji and post WW2 period

P.56

Meiji Government: Radical ReformistInitially, avoid colonization by the WestRapid modernization and WesternizationBecome “first-class” nation on a par with West

• Political goal - abolish feudalism and class society; introduce Western style constitution and parliament

• Economic goal - industrialization based on rapid adoption of Western technology

• External goals - (1) revise unequal treaties as soon as possible; (2) modernize army & navy, establish “sphere of influence” around Japan

P.43

Fukoku Kyohei ( 富国強兵 ) - Enrich the country, strengthen the militaryShokusan Kogyo （殖産興業） - Increase production, encourage industry

--Organized quickly after abolishing hans--Half the cabinet - Iwakura (leader), Okubo, Ito, Kido, Yamaguchi,

and other high officials (46); attendants (12), students (49); total 107 members

Purpose 1: Start renegotiating unequal treaties (failed)Purpose 2: Inspect Western systems and technology

Official report with illustrations by Kunitake Kume (scholar)<Results>(1) Valuable inputs for policy making(2) Conflicts with “home-keeping” gov’t (leaders who stayed home)

Iwakura Mission (Dec.1871-Sep.1873)

P.44

Toshimichi Okubo 　 (1830-1878)

• Formerly, lower samurai from Satsuma Han• Top-down promoter of technology import

and industrialization (after returning from Iwakura Mission)

• Political influence—Councilor (Minister) of Finance; then Councilor of Home Affairs

• Policy measures:--Supporting zaibatsu (Iwasaki, Godai) to promote industries

and import substitution (shipping, etc)--Establishment of SOEs and research institutes--Trade & industry exhibitions (for Japanese products)--Set up ministries, police and local governments--Send troops to Taiwan; suppress Saigo Rebellion

PP.44-45

Okubo

Saigo

Okubo’s Back-to-Office Report after Iwakura Mission, 1874“The strength of a country depends on the prosperity of its people which, in turn, is based on the level of output. To increase output, industrialization is essential. However, no country has ever initiated the process of industrialization without official guidance and promotion.”

Okubo’s Proposal on Constitutional Politics, 1873

“Monarchy is a thing of the past, but we are not yet ready for democracy. Moreover, the central government must have strong authority for the time being to carry out bold reforms. Thus, the most practical system Japan can now adopt is … constitutional monarchy.

Okubo’s Proposal Concerning Promotion of the Nation’s Fundamental Capacities, 1876“…If we are to turn the tide around and correct the situation [of slow economic progress, trade deficits, etc.], we have no choice but to encourage private business and international trade by mobilizing effective policies to cultivate fundamental strengths of economic activities and expand commercial profit. If we do not regard this as the duties of the government and leave the matter to people’s own devices and simply wait for the results, will the decline ever stop? This is the most pressing of all national issues. Even though such policy may not be endorsed by the orthodox doctrine of political economy, rules must be revised to respond to the urgent needs of our time.”

Yataro Iwasaki (1835-85)

• Seisho ( 政商 ) from Tosa, founder of Mitsubishi Zaibatsu• Shipping company--grew fast with government

support (receiving gov’t ships, contract for military transport)

• Established Nippon Yusen (NYK Line), fierce battle with Kyodo Unyu (anti-Mitsubushi company), 1883-85

• Expanded to many areas: trade, banking, shipbuilding, coal, mining (later, more)

Bakufu’s Steel Mill in Nagasaki, transferred to Mitsubishi in 1884

Mechanical factory in Nagasaki, ca 1885

PP.45-46三菱

Subsidies for Targeted Industry:The Case of Shipping & Ship Building

• Navigation Promotion Law (1896) – subsidizing maritime transport operators if:- Operate international routes

- Large ships over 1,000 tons

- Fast domestic ships

These targets were raised in steps offering more incentives

• Shipbuilding Promotion Law (1896) – subsidizing building of steel ships over 700 tons (later 1000 tons)

Source: Yoshio Ando (ed), Databook on Modern Japanese Economy, 2nd ed., Univ. of Tokyo Press, 1979.

Financial Structure of Nippon Yusen

Subsidies Received by Shipbuilders

Tons

Ship Production

Thousands　of　yen

Total Tonnage Ship Horsepower Engine

Mitsubishi 43 6055.5 207.4 5146.4 181.8 909.0Kawasaki 34 2379.0 96.7 1912.0 93.4 467.0Osaka 30 618.7 30.5 478.3 24.1 140.4Ishikawajima 2 53.0 2.5 43.0 2.0 10.0Ono 1 12.2 0.8 9.5 0.5 2.7Uraga 2 47.8 2.7 47.8 0.0 0.0TOTAL 113 9166.2 340.6 7637.0 301.8 1529.1

Subsidies　received　forNo.　ofshipsbuilt

Million　yenRevenue Subsidy Cost Profit

1886-90 21.8 4.4 21.3 4.91891-95 33.0 4.5 28.3 9.21896-00 59.6 14.9 63.1 11.41901-05 94.5 18.9 92.6 20.81906-10 108.3 26.0 118.9 15.41911-15 145.5 24.0 141.7 27.8

Eiichi Shibusawa (1840-1931)From Saitama

Tomoatsu Godai (1836-1885)From Satsuma 　

Super business promoters -- but they did not form zaibatsu

P.46

-Initially, anti-bakufu fighter-Next, assistant to last shogun-Works vigorously for MOF (invited by Meiji Government)

-President of First “National” Bank”-Company builder and business coordinator for many years-Social contributions(See handout or go to museum)

-Studies and builds human network in Nagasaki-Visits UK; realizes need to industrialize, writes report-In Osaka, helps to create copper co., railroad, shipping co., rice & stock exchanges, cham. of commerce, university, test centers, trading center, etc-SOE privatization scandal

Rise and Fall of Merchants and Enterprises

0

50

100

150

200

250

1849 1864 1875 1888 1902

Persons

Millionaires　of　Edo　period

New　millionaires　of　Late　Edo

New　millionairesin　early　Meiji

New　millionaires　in　company　　　　　　　　　　　　　　　boom　period

Source:　Computed　from　Miyamoto　(1999）,　p.53.　Each　line　shows　how　many　ofthe　new　millionaires　emerging　each　period　survived　in　later　periods.

Q: Who were the main drivers of Meiji industrialization?

A: All types of entrepreneurs including Edo gosho, Yokohama merchants, Meiji zaibatsu, and company boom millionaires.

► Survival game was severe: many entries, many exits

► Japan’s industrial revolution: from 1880s to 1900s

► Japan-China War,Japan-Russia War also accelerated industrialization

P.47

Constitution and ParliamentPP.48-50,226

Western style legal system and functioning parliament were considered absolutely necessary to become a “first-class” nation

Preferred model Desired speed Remark

Government(Okubo, Ito, Iwakura, K. Inoue)

German constitutional monarchy

Gradualism (prepare during 1881-90)

Cracked down on oppositions; H. Ito drafted constitution

Freedom & People’s Rights Movement; Fukuzawa, Okuma

British (two-party) parliamentary system

As soon as possible

Tosa samurai, rich farmers; turned violent sometimes

<First parliamentary debate, 1890>--Oppositions demand “Budget Cuts, Reduce People’s Burden” (tax cuts) --Gov’t wants aggressive spending; policy independence from party politics

Emperor promulgates Constitution, 1889.

Foreign policy and military modernization

(1) Revision of unequal treaties with West

--Considered impossible until Japan became Western style nation--Legal preparation (constitution & parliament)--Superficial imitation (eg. Rokumeikan) and too much concession to West were severely criticized by press and oppositions--Regaining customs rights 1899-1911, court rights 1894-99

(2) Military modernization and expansionism

--Introduction of Western military technology and systems--Military budget (esp. battleships) was main cause of deficit--Invading Korea: provocation, victory over China’s Qing Dynasty (1894-95), fighting with Russia (1904-05), annexation (1910)--Taiwan colonized after Japan-China war, 1895

Cloud above the Slope ( 坂の上の雲 )

• Historical novel by Ryotaro Shiba, 8 vols. published 1968-72• Lives of 3 people from Matsuyama, who shaped Meiji Japan• Motif--dynamism of young nation; identification of one’s life

with nation’s fate• Controversy--Japan-Russia War: Japan’s self-defense against

Russian aggression?• NHK (Japan Broadcasting Corp.) dramatized and broadcasted

this novel in 2009-11

Yoshifuru Akiyama (1859-1930)Japanese Army, leader of cavalry

Saneyuki Akiyama (1868-1918)Japanese Navy, defeating Russia’s Baltic Fleet

Shiki Masaoka (1867-1902)Literature, haiku innovator