Economic Modernization of Meiji Japan

8/9/2019 Economic Modernization of Meiji Japan

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Economic Modernization of Japan

• (alance of e+ports and imports so as to solve the pro%lem of unfavoura%le

%alance of payments.

• reation of employment opportunities for the people, especially for the

discontented and jo%less former samurai.

• -mprovement of the economic conditions of the peasants.

• Strengthening of the material foundation of the Meiji state so that the

government could collect more ta+ and %e wealthier.

Agricultural reforms

Reasons for development

• &apan was still largely an agricultural country %y 1 /.

• 0 modernized agriculture is the foundation of and pre#condition for

successful industrialization.

Contents

• 0gricultural students were sent a%road to learn more advanced agricultural

techni ues.

• Foreign e+perts were employed to give advice on agricultural development.

• 2ew kinds of plants and seeds were imported.

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• *+perimental agricultural stations and agricultural colleges were founded

throughout the country to test new methods of planting and advise farmers on

new agricultural techni ues.

Results

'ith state encouragement as such, agricultural production steadily e+panded.

Total rice production, grew over 3/4 %etween 1 / and 1 5", partly %ecausenew land was opened for cultivation, %ut mostly %ecause new farming

methods increased productivity.

6n the other hand, great progress was made in silk production and e+port. (y

the 1 5/s, silk alone already accounted for 173 rd of all &apan8s e+port trade %y

value. Three reasons e+plained this9• There was a favoura%le market in *urope.

• The high uality of &apanese silk attracted many %uyers.

• Silk manufacture was technically improved.

Effects• Since the Meiji government8s revenue depended largely on agricultural

ta+ation, e+pansion in agricultural production indirectly increased the

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government8s income that could %e invested in other modernization

programs.

• The great e+pansion in silk e+ports helped to %alance foreign imports, thus

partly making up for the unfavoura%le %alance of payments that &apan had

%een suffering.

• -n general, agricultural e+ports earned much money to pay for the industrial

machinery and raw materials that had to %e imported.

• The increase in the income of the farmers created a home market for locally#made consumer goods.

• :ural discontent was to a certain e+tent pacified when the incomes of many

farmers were raised.

• 0griculture %ecame increasingly specialized and commercialized, which

increased tenancy as well as large#scale concentration of land for the

landlords.

Many poor tenant#farmers went from the villages to the towns, there%y

providing cheap la%our for ur%an industrialization. 'hen more and more

farmers %ecame tenants, the countryside was increasingly under the control

of conservative landlord#merchants. Thus, 'estern democratic movements

failed to take root in rural &apan.

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Industrialization

Requirements of successful industrialization

• 0 great %ody of skilled la%our and advanced technology

• 0 large store of capital

Tec!nical skills could "e o"tained in two wa#s

• Firstly, they could %e %orrowed from a%road. Thus, foreign advisers and

engineers were employed to run new industrial undertakings and train native&apanese technicians.

• Secondly, they could %e o%tained through modern education. Thus, technical

schools were set up. ompulsory education was introduced.

6nce &apanese had %een successfully trained to %ecome skilled workers and

technicians, they could replace foreign advisers.

;et, capital was a pro%lem. The few wealthy merchant families of late

Tokugawa times were unwilling to invest in modern enterprises. They

preferred to remain in traditional economic activities like %anking,

moneylending or land %uying.

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T!ere were t!ree reasons for t!is

• These merchant families had conservative


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• -t was necessary to defend the country against any foreign military threat.

Thus, ship%uilding yards, gun#powder and munitions factories, and artillery

works were esta%lished.

+evelopment in consumer*goods industries

• onsumer#goods industries were also developed, though emphasis put on

them was not as strong as that on heavy industries.

• Silk#reeling plants, glass and chemical manufacturing plants, a cement works,a cotton#spinning factory and a sugar factory were esta%lished.

• The cotton spinning mill encouraged rural &apanese spinners to use machines

in spinning raw silk.

• The sugar refinery %ought sugar products from local &apanese farmers.

-n these ways, industrialization %enefited agriculture in return.

Encouragement of private investments

0t the same time, attempts were made %y the government to divert private

capital into these newly developed government industries. The results were

encouraging.• The former daimyo and the old merchants %egan investing their wealth in the

new enterprises.

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• The landowners, who were enriched %y the commercialization of agriculture

that partly resulted from the Meiji land ta+ reform, %egan transferring most of

their new savings out of agriculture into new industries.

$overnment sale of industries to private owners!ip from &'') onwards

Reasons

0fter 1 /, while still retaining control and ownership of military#strategic

industries @like railways, telegraphs, ship%uilding, arms#manufacturing, andarsenalsA, the Meiji government %egan selling off other industries to a few

trusted private companies at very low prices. This change of industrial policy

could %e e+plained %y a num%er of reasons9

• First, government initiative in industrial development at %est only laid the

%asis for industrial growth, while long#term industrial e+pansion must rely on

private companies.

• Secondly, the government was at the moment having financial pro%lems.

The payments of samurai stipends in 1 $, the cost of suppressing the 1

Satsuma :e%ellion, and the general e+penditure of modernization programs,

all %rought a%out financial difficulties for the Meiji government. Manyindustrial projects under state operation were not profita%le, owing to their

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%eing still at the infancy stage. The Meiji government was at the moment in

need of funds for naval e+pansion.

$overnment supervision

0 few private companies %ought many government#owned

industries. Thereafter, the Meiji government, instead of actively and directly

founding, managing and controlling industries itself, took on the role of

indirect protector and supervisor of industrialization. The governmentesta%lished a )epartment of 0griculture and ommerce in 1 1.

-n 1 B, the first &apanese central %ank @state %ankA was set up, through

which the government could regulate industrial growth. Through tariffs, ta+

policy and %ig uasi#pu%lic %anks, the government esta%lished indirect

control over the economy. Su%sidies and technological advice were given tothe private companies.

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Effects

,aving sold non*militar# industries to private owners!ip% t!e

government was in a "etter financial position to overcome economic

difficulties like inflation-

0 policy of retrenchment @cutting unnecessary state e+penditureA was adopted

in the early 1 /s. -n the end, 17" of government revenue was saved, and

inflation stopped. The %asis for orderly and sta%le growth had %een laid.

Concentration on militar# industries

>aving disposed of non#military industries, the Meiji government could now

concentrate on purely military ones. Thus, despite the general decrease in

other state e+penditures in the 1 /s, there was a sharp rise in military

spending @over $/4A.

Rise of t!e zai"atsu

The few private companies that succeeded in %uying government industries

%ecame monopolistic economic giants known as the zai%atsu @financial

com%inesA. Famous zai%atsu included the Mitsui, the Mitsu%ishi, the

Sumitomo and the ;asuda. They ran a wide range of economic activities,

from %anking and manufacturing to insurance. Free economic competition

was suppressed.

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Close relations!ip "etween government and "usiness

The sale of government industries marked the su%ordination of %usiness to

government interests. 0s the zai%atsu were %rought up %y an undemocratic

government, they were used to doing %usiness under an undemocratic

government, even under a militarist dictatorship in the 153/s later.

.irmer support for t!e Mei/i governmentSome industries were sold to a few former officials of the Meiji government

like Coto. This had the effect of strengthening the support for the Meiji state.

Measures taken "# t!e Mei/i government to protect its #oung industries

against 0estern economic imperialism

These measures were what a Meiji leader learnt from (ismarck in a &apanese

mission to Cermany in 1 3.

• The Meiji government tried to discourage foreign investments in &apan %y

%uying %ack foreign#owned industrial undertakings.

• Trade rules were enacted to the disadvantage of foreign %usinessmen.

•

Foreign loans were repaid. 2o further loans from foreigners were contracted.

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1uccessful industrialization

0fter the 1 /s, %oth light and heavy industries continued to grow. From

1 / to 1513, industrial output increased five#fold, while national income

dou%led.

,eav# industries

(y the early 1 5/s, &apan was a%le to produce machinery and electrical

e uipment itself. The first &apanese locomotive was manufactured. (oth coaland copper were e+ported.

Lig!t industries

Te+tile industries were particularly important. The reasons were many9

• First, they re uired less capital and less technical knowledge to run than

heavy industries.

• Secondly, they could %e developed in small workshops rather than large and

e+pensive factories.

• Thirdly, they made use of the rural la%our that &apan8s farm households could

easily provide.

onse uently, private investments in te+tile industries were great and

progress made was fast. )uring the 1 /s, most te+tile products were

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a%sor%ed %y the domestic market. From the 1 5/s on, te+tile goods were

e+ported.

+evelopments of t!e Mei/i industrialization

Effects of industrialization

2olitical effects

-ndustrialization laid the necessary foundation of a modern state. 0s the Meijigovernment had a strong and modern economy to rely on, the scope of

government power was enlarged, its efficiency increased.

:apid industrialization strengthened the Meiji state8s undemocratic rule, as it

provided new instruments for power concentration. The government could

therefore effectively put down internal oppositions and carry out a stronger

foreign policy.

.oreign effects

0s %oth domestic and foreign trade increased under industrialization, foreign

economic e+ploitation could %e shaken off.

?arge volumes of te+tile and silk e+ports helped to %alance foreign imports.

Since the government controlled all foreign trade, it concentrated on

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importing what it needed9 raw materials and industrial machinery for

industrialization, rather than foreign lu+uries. -n the end, foreign imports into

&apan were gradually cut down.

The control of coastal shipping gradually fell %ack into &apanese hands from

foreigners, as the Mitsu%ishi succeeded in %uilding up a strong trade fleet.

Economic effects

-n the long run, industrialization destroyed &apan8s traditional agriculturaleconomy.

• First, the local economically self#sufficient village society was replaced %y

increased agricultural commercialization and specialization.

• Secondly, with greater circulation of goods, capital and even la%our, localism

of village society %roke down= the village people felt that they %elonged not

only to the village %ut to the nation as a whole.

• Thirdly, industry replaced agriculture as the nation8s most important

economic activity. 0lso, industrialization reduced economic ine ualities of

the old Tokugawa society. Cradually, however, new concentrations of wealth

and power were %uilt up %y the zai%atsu, which controlled much of the entire

country8s economy.

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1ocial effects

The standard of living in society was raised. -ndustrialization improved the

economic conditions of the people. -n return, the people supported the

government.

6n the other hand, social mo%ility was facilitated. Successful industrialists or

%usinessmen %ecame Modern &apan8s social leaders.

0lso, success in industrial growth greatly strengthened &apan8s nationalist

spirit and confidence. Since industrialization was at first started %y the

government and later placed under strict government supervision, an

independent middle#class of merchants and industrialists who would support

democratic movements failed to emerge. 0s a result, the forces of democracy

were weak.

Militar# effects

The strong emphasis placed on military#strategic industries strengthened the

power and position of the military esta%lishment and indirectly led to the rise

of militarism later.

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Economic Modernization of Meiji Japan

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