HDS222 ASSIGNMENT

INTRODUCTION

For nearly 250 years, the islands comprising the nation of Japan kept a silent vigil in the far reaches of the Pacific Ocean. By the early 1600s, foreigners had been expelled and Christianity outlawed. Occasional attempts at contact by western nations, who alternated between intrigue and frustration, met with stony faced orders to leave. All this changed in 1853, when the United States sent Commodore Matthew C. Perry to Japan with a letter from President Millard Fillmore to the emperor, and orders (actually written by Perry himself) to obtain a treaty. Two connected factors necessitated these actions. The first involved the lucrative China trade, driven by profit and the alluring scents of tea and peppers, the luxury of exotic silks and the delicacy of fine porcelains. The second was the need for a refueling station for the coal-powered, smoke-billowing steam ships which had so astounded the Japanese upon Perry's arrival. These ironclad monsters needed huge amounts of coal, leaving little room for cargo on the trips to and from China and San Francisco. Japan happened to have plenty of coal deposits and found itself encompassed within the American idea of manifest destiny as the stepping stone to China. Perry completed his mission in 1854 and within the next few years, technologically inferior Japan was intimidated into a number of unequal treaties with America, Britain, France and Russia. The Dutch also pressed their advantage in having been the only outside western contact with Japan during the isolation years through a small, tightly controlled trading post on the island of Deshima outside of Nagasaki. It appeared as if Japan might be headed for the same fate as China, to eventually lose central control to competing spheres of foreign influence.

THE MEIJI RESTORATION: THE DAWN OF INDUSTRIALIZATION

The Meiji Restoration in 1867 was one of the turning points in the history of Japan. The Restoration deprived feudal lords of their political powers, paved the way for industrial development under capitalist rules, and triggered the integration process of the previously isolated Japanese economy into international trade networks

The newly created Meiji Government, led by young and passionate ex-lower- samurai-class officials, laid down wide range of reforms in a fairly intensive manner. The reforms included,

The Abolition of the Feudal Class System created higher mobility in society in general. Especially important in the context of industrialization, it released millions of unproductive samurai for business, official and other productive occupations. It also mobilized farmers to work in newly emerged factories and services, mostly located in metropolitan or urban areas. In principle, everybody was free to choose his/her occupation. The Abolition of the Feudal Trade Restrictions helped to create a truely "national" market and stimulated entrepreneur-ship among people.

Land Tax Reform and the introduction of a new national currency, the yen: the former created a nation-wide tax system and assured the new government's revenue, and both accelerated the nation-wide circulation of money.

Infrastructure Development

Together with these reforms, the Government gradually developed various elements of an infrastructure for national development. A Nation-wide postal/telegram network was established, and a series of civil engineering works was started to expand land transport and water supply networks. In the late 1890's, national railway construction was started. In 1870 the Ministry of Engineering was created to manage these infrastructure development programs.

Invisible infrastructures were also arranged. A patent regulation was issued in 1885, and a unified metric system was introduced in 1891

Government Industrial Investment and Its Divestiture

Although extensive small-scale manual production already existed in traditional industries such as textiles, metal working and wood processing before the Restoration, the Meiji Government took initiatives towards industrialization by investing directly in some strategic sectors of manufacturing with the slogan "Shokusan Kogyo". The Ministry of Engineering was in charge of these investments. It established government-owned factories in several sectors such as shipbuilding, steel, paper, chemicals and modernized fiber spinning, to demonstrate modern technology imported from abroad.

It must be noted that most factories were sold to the private sector during the 1880s, with several exceptions in military production facilities, because of the fiscal crisis that resulted from civil wars in Japan. As this divestiture was associated with the transfer of technological resources from the public sector to the private sector, it offered private business opportunities to transform commercial capital into industrial capital, and helped to form the Zaibatsu groups as a result.

In textiles , which had been the mainstay industry in Japan until World War II, although the government's activities were limited mainly to technological support for quality improvement and control, the operations of government spinning factories had a substantial demonstration effect on private activity in the sector. It stimulated the adoption of modern technology with some modifications to fit the Japanese environment.

With the divestiture of government-run factories, the Ministry of Engineering was abolished in 1890. The Ministry of the Interior performed general supportive functions for industry until 1890, and the then-formed Ministry of Agriculture and Commerce took over the role afterwards.

Foreign Experts and the Education System

During the first few decades after the Restoration, the government invited thousands of foreign educators, engineers and other experts to provide assistance in managing the government-led civil works, and in running government-owned factories and educational institutions The Ministry of Engineering allocated about 42% of its total budget to salaries for foreign experts from 1870 to 1885. This shows the strong eagerness of the new government to obtain western invented modern technologies. But on the other hand, the cost to the national budget of these high salaries forced the eventual substitution of Japanese nationals for foreign experts. This had almost been achieved by 1890s.

The government started compulsory education in 1872. Modern-style school facilities were constructed and newly trained teachers were sent to all corners of the country. The enrolment rate had reached almost 50% in 1890 and more than 80% in 1900. The Ministry of Engineering established schools for engineering, telecommunications, iron and steel making, and handicrafts. The government sent a number of young talents overseas for study.

All the engineers and technicians educated through these programs worked in government-owned factories and in educational and training institutions, gradually replacing foreign experts.

Later most industrial training schools were transferred to the Ministry of Education. The focus of education shifted to more general and higher-level disciplines. The investment in technological resources, including in the educational system, was heavily oriented to practical engineering. University education also put emphasis on engineering rather than on science. Government research institutions were oriented to providing technical services for enterprises as well. This emphasis on engineering was a natural choice for a latecomer to industrialization and was maintained after the Second World War.

The International Trade Regime

After more than two hundred years of isolation from international trade, Japan re-appeared in international trade arena, through the almost peaceful conclusion of a trade treaty with the United States in 1858. Similar treaties with other trading powers followed it in successive years. As a result of these treaties, Yokohama, Kobe and a few more ports were opened.

Up until around 1900, industrial development took place under an almost neutral trade regime. This was not necessarily desired by the Japanese government. It was not allowed to have independent authority over the formulation of tariffs until 1899. Until that year, tariff rates, which had been bound by an international treaty, were 5% or less. Export was also taxed to a similar extent. Quantitative restrictions played no role until 1931.

The growth of ocean fleets played an important role in the expansion of trade. The total tonnage of Japanese ocean fleets was 23,000 in 1872. It jumped to 3.05 million in 1920 and increased to 6.4 million in 1941, which was the third largest in the world only after the UK and US.

Foreign Direct Investment

Before the Restoration, a few foreign trading companies had some stakes in mining sectors. These foreign stakes were purchased back by the new government. Foreign firms resumed direct investment in Japan only after 1899. Most foreign investments were joint ventures, and mostly in technology-intensive sectors such as electrical machinery and automobiles, established through the initiatives of Japanese enterprises that encountered demand from foreign enterprises for equity participation in exchanges of technology and equipment

REFERENCES

It was just sixteen years after the Nanjing Treaty, which was imposed on China by the colonial powers as a result of the Opium War (1840-1842).

Milton Freedman regards the free trade regime of Japan in the initial three decades of independence as one of the major success factors for industrialization, compared with the stagnation of industrial development in India after independence (Free to Choose, 1979, Harcourt Brace Jovanovich, Chapter 2).

Takashima, one of the largest coal mines then in Japan, was owned by British merchant Thomas Blake Glover, and the first steam railways extended from Tokyo to Yokohama was an investment by Americans.