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Meiji Modernization and Industrialization

Japan emerged from the Tokugawa-Meiji transition as the first Asian industrialized nation. Domestic commercial activities and limited foreign trade had met the demands for material culture in the Tokugawa period, but the modernized Meiji era had radically different requirements. From the onset, the Meiji rulers embraced the concept of a market economy and adopted British and North American forms of free enterprise capitalism. The private sector-- in a nation blessed with an abundance of aggressive entrepreneurs-- welcomed such change.

One of the chief difficulties with which the Meiji statesmen had to contend was finance. When they took over the treasury from the Bakufu there were absolutely no funds in hand, and for some years, as has been shown above, all the revenues of the former fiefs were locally expended, no part of them, except a doubtful surplus, finding its way to the Imperial treasury. The only resource was an issue of paper money. Such tokens of exchange had been freely employed since the middle of the seventeenth century, and at the time of the mediatization of the fiefs, 1694 kinds of notes were in circulation.

The first business of the Government should have been to replace these unsecured tokens with uniform and sound media of exchange. But instead of performing that duty the Meiji statesmen saw themselves compelled to follow the evil example set by the fiefs in past times. Government notes were issued. They fell at the outset to a discount of fifty per cent, and various devices, more or less despotic, were employed to compel their circulation at par. By degrees, however, the Government's credit improved, and thus, though the issues of inconvertible notes aggregated sixty million yen at the close of the first five years of the Meiji era, they passed freely from hand to hand without discount. But, of course, the need for funds in connexion with the wholesale reforms and numerous enterprises inaugurated officially became more and more pressing, so that in the fourteenth year (1881) after the Restoration, the face value of the notes in circulation aggregated 180 million yen, and they stood at a heavy discount.

Economic reforms included a unified modern currency based on the yen, banking, commercial and tax laws, stock exchanges, and a communications network. Establishment of a modern institutional framework conducive to an advanced capitalist economy took time but was completed by the 1890s. By this time, the government had largely relinquished direct control of the modernization process, primarily for budgetary reasons. Many of the former daimyo, whose pensions had been paid in a lump sum, benefited greatly through investments they made in emerging industries. Those who had been informally involved in foreign trade before the Meiji Restoration also flourished. Old bakufu-serving firms that clung to their traditional ways failed in the new business environment.

The growth of agricultural and industrial enterprise was one of the most remarkable features of Restoration Japan. Up to the beginning of the Meiji era, agriculture almost monopolized attention, manufacturing industry being altogether of a domestic character. Speaking broadly, the gross area of land in Japan, exclusive of Saghalien, Korea, and Formosa was seventy-five million acres, and of this only some seventeen millions are arable. It may well be supposed that as rice is the principal staple of foodstuff, and as the area over which it can be produced is so limited, the farmers have learned to apply very intensive methods of cultivation. Thus it is estimated that they spend annually twelve millions sterling $60,000,000 on fertilizers. By unflinching industry and skilled processes, the total yield of rice has been raised to an annual average of about fifty million koku; that is to say, two hundred and fifty million bushels.

Manufacturing industry increased by leaps and bounds. Thus, whereas at the opening of the Meiji era, every manufacture was of a domestic character, and such a thing as a joint-stock company did not exist, there were fully 11,000 factories giving employment to 700,000 operatives, and the number of joint-stock companies aggregates 9000. Evidently, Japan threatens to become a keen competitor of Europe and America in all the markets of the Orient, for she possesses the advantage of propinquity, and as well an abundance of easily trained labour. But there are two important conditions that offset these advantages. In the first place Japanese wages have increased so rapidly that in the fifteen years up to 1915 they had nearly doubled, and, secondly, it must be remembered that Japanese labour is not so efficient as that of Europe and America.

The work of railway construction, which may be said to have commenced with the Meiji era, has not advanced as rapidly as some other undertaking The country has now only 5770 miles of lines open to traffic and 1079 mi'ff under construction. All these railways may be said to have been built with domestic capital. Nearly the whole was nationalized in 1907, so that the State has paid out altogether sixty-six million pounds sterling $325,000,000 - account of railways, an investment which yields a net return of about three and a half millions sterling $17,000,000 annually.

Another direction in which Japanese progress has been very marked is in the development of a mercantile marine. At an early period of the country's modern history, her statesmen recognized that transports are as necessary to the safety of a State as are soldiers, and, in fact, that the latter cannot be utilized without the former. The Government, therefore, encouraged with liberal subsidies and grants-in-aid the purchase or construction of ships, the result being that whereas, in 1871, Japan's mercantile marine comprised only forty-six ships with a total tonnage of 17,948, the corresponding figures in 1910 were 6436 and 1,564,443 respectively. In the war with China in 1894-1895, as well as in that with Russia in 1904-1905, Japan was able to carry large armies to the Asiatic continent in her own vessels, thus demonstrating the wisdom of the policy pursued by the Government, although it had been habitually denounced by the enemies of subsidies in any circumstances. Shipbuilding yards had also been called into existence, and there were four of them where vessels aggregating 87,495 tons had been built.

The government was initially involved in economic modernization, providing a number of "model factories" to facilitate the transition to the modern period. After the first twenty years of the Meiji period, the industrial economy expanded rapidly until about 1920 with inputs of advanced Western technology and large private investments. Stimulated by wars and through cautious economic planning, Japan emerged from World War I as a major industrial nation.

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Page last modified: 20-11-2011 19:18:54 ZULU