Economic Development of Japan No.4 Meiji 2&3 Meiji Mura

Chronology of Meiji Industrialization 1870s - Monetary confusion and inflation US banking system adopted with little success Printing money to suppress Saigo’s Rebellion (1877) Early 1880s - Matsukata Deflation Stopping inflation, creating central bank (Bank of Japan) Landless peasants & urban poor (“proletariat”) emerge Late 1880s - First company boom Osaka Spinning Company and its followers Series of company booms (late 1890s, late 1900s, WW1) Postwar management (after J-China War & J-Russia War) Fiscal spending continued even after war  BoP crisis Active infrastructure building (local gov’ts) & military buildup Masayoshi Matsukata (Councilor of Finance) PP.57-58

P.230 Source: Management and Coordination Agency, Historical Statistics of Japan, Vol.4, Inflation in Meiji Period

Money and Inflation in Early Meiji

First Company Boom Number of companies Legal capital (million yen) Yoshio Ando ed, Databook on Modern Japanese Economic History, 2rd ed, Tokyo Univ. Press, 1979.

Technology Transfer PP Foreign advisors (public and private sector) 2. Engineering education (studying abroad, Institute of Technology; technical high schools) 3. Copy production, reverse engineering, technical cooperation agreements (esp. automobiles, electrical machinery); sogo shosha (trading companies) often intermediated such cooperation Private-sector experts, 1910 Mining 513 (18.0%) Textile 300 (10.6%) Shipbuilding 250 (8.8%) Power & gas 231 (8.1%) Trading 186 (6.5%) Railroad 149 (5.2%) Food 149 (5.2%) TOTAL 2,843 (100%)

Studying Abroad (Early Engineers) First students: bakufu sent 7 students to Netherlands in 1862 (naval training) By 1880s, 80 Japanese studied engineering abroad (shipbuilding, mechanics, civil engineering, mining & metallurgy, military, chemistry) Destination: UK (28), US (20), France (14), Germany (9), Netherlands (8) They received top-class education and could easily replace foreigners after coming back They mostly worked in government (no modern private industries existed at first)—Ministry of Interior, MoF, Army, Navy, Ministry of Industry P.64

Other Asian Nations in Late 19th Century China’s Westernization Movement (1860s-90s) High officials of Qing Dynasty imported Western technology to strengthen China. About 250 students were sent to US & Europe during 1870s. Military mills & shipyards were built. Telegraph, paper mills, steel plants, maritime transport, military schools, mines, foreign book translation agency were introduced. Chinese navy fleet was larger and more modern than Japanese. Modern technology under feudalism?—lack of political & administrative reform and persistent resistance to Westernization prevented success. Thailand’s Chakri Reform (Rama V, ) Reforms in education, military, roads & railroads, telecom, water, etc. Royal family members studied abroad. Note: some Asian students studied in Japan. Not all students studied technology. Korea was not eager to learn Western technology or system.

1871 Koburyo of Ministry of Industry; 1877 renamed to Kobu Daigakko; 1886 merged with Tokyo Imperial University (under Ministry of Education) First President: Henry Dyer (British engineer) with philosophy “judicious combination of theory and practice” Preparatory course (2 years), specialized studies (2 years), internship (2 years) + government-funded overseas study for top students 8 courses: civil engineering, mechanical engineering, shipbuilding, telecommunication, chemistry, architecture, metallurgy, mining (classes in English) Producing top-class engineers (import substitution)—Tanabe Sakuro (designer of Biwako-Kyoto irrigation canal & power generation); Tatsuno Kingo (builder of Tokyo Station, BOJ, Nara Hotel, etc.) P.64 Kobu Daigakko 工部大学校 (Institute of Technology)

Parallel development or “hybrid technology” PP.65-67

Textile: Osaka Boseki (Spinning) Japan’s first successful modern cotton spinning factory created by Eiichi Shibusawa in 1883 (private JSC). Takeo Yamanobe studied practical textile engineering in UK, and purchased textile machinery before returning to Japan. Osaka Spinning was an instant success with many followers. Reasons were (i) large spindle size & latest Ring machine; (ii) sufficient funding; (iii) use of steam power instead of hydraulic permitting urban location; (iv) use of imported Chinese cotton; (v) 24-hour/2-shift operation; and (vi) Shibusawa’s overall support. However, shareholders demanded quick dividends while Yamanobe (factory manager) wanted to invest in technology and equipment for expansion. Yamanobe wanted to quit, but Shibusawa protected and encouraged him. PP Shibusawa Yamanobe

Steel Production During , Japan’s steel production covered about 20% of domestic demand (estimated by Suzuki, 2000), much lower than France (90%), Germany (70%) or US (70%). These countries had high steel tariffs (20-100%) compared with Japan (5%). Japanese steel mill in Kamaishi (private) could not compete with imports without tariff protection of 30% or higher. In 1901, government built a large-scale modern mill in Yawata, Kyushu to become Japan’s largest mill in the pre-WW2 period. With the outbreak of Japan-Russia War in 1904, steel demand greatly increased. As tariff right was regained, steel tariffs were raised to 5-10% in 1899 and to 10-20% in This encouraged Mitsui and Mitsubishi to start investing in steel production. Early days of Yawata Iron & Steel Works

Yawata Iron & Steel Works: German Technology + Japanese Adjustment In 1895, government decided to build a state-of-art steel mill. For funding, reparation from China was used (Japan-China War ). After research, German technology of GHH was selected. Many German engineers were hired with high salary for construction and operation. The first mill started operation in However, output was low, loss was made, and operation stopped due to the lack of coke oven & iron ore content. Government built a coke oven and began to carefully select materials. Japanese experts from Kamaishi changed the blast furnace & operation method. In 1905, production became large and smooth. From 1906, capacity was expanded in many aggressive steps.

Neoclassical Labor Market PP Japanese workers: --Too much job hopping, do not stay with one company --Lack of discipline, low saving --Barrier to industrialization Source: Ministry of Agriculture and Commerce, Survey of Industrial Workers, Female domestic workers: --Urban industrialization and rural poverty and labor surplus  female migration from villages to cities --End of Meiji to early Showa were the peak period of jochu (housemaid) % of non-farm female workforce, second largest after textile workers (1930) --5.7% of households hired jochu (1930) --There were both young and old jochu, some living-in and others commuting --International comparison (female non-farm employment share): UK 1851 (11.4%), US 1910 (11.8%), Thailand 1960 (10.6%), Philippines 1975 (34.3%) Source: Konosuke Odaka, “Dual Structure,” 1989.

Wage: Gender Gap Farm employmentTextile weaversDomestic servants Sen per day Yen per month Male Femal e F/M %Male Femal e F/M %Male Femal e F/M % % % % % % % % % % % % % % % % % % % % % % % % % Source: Ministry of Agriculture and Commerce, "Table of Wages." Note: 1 yen = 100 sen.

Konosuke Odaka: World of Craftsmen, World of Factories (NTT Publishing, 2000) In Japan’s early factories, traditional shokunin (craftsmen) and modern shokko (workers) coexisted. Craftsmen were proud, experienced and independent. They were the main force in initial technology absorption. Workers received scientific education and functioned within an organization. Their skills and knowledge were open, global and expandable. Over time, craftsmen were replaced by workers. Experience was not enough to deepen industrialization. Prof. Odaka proves these points by examining the history of concrete firms in metallurgy, machinery and shipbuilding.

Prof. Odaka’s Working Hypotheses In the early years of factories, Japan’s traditional craftsmen in mechanics and metal working played key roles in absorbing new technology. Farmers and merchants were not suitable for factory operation. However, trained engineers, not craftsmen, created a modern production system suitable for Japan. –Adaptation of imported system to Japanese context –Production management system, including hired labor –Skill formation system based on formal education and OJT The gap between craftsmen’s skill and modern technology had to be bridged. Hired foreigners, then Japanese engineers, provided this bridge up to WW2.

Meiji Mura (Meiji Village) is an open-air museum of Meiji architecture and culture, Inuyama City, Aichi Prefecture Toyota Techno Museum in Nagoya displays textile machines in actual operation, including Sakichi Toyota’s 1924 invention. It also explains Toyota’s car history.