Industrialization was by no means the only significant feature of japanese economic history

after the opening of the ports, but it is the one which has attracted most attention. The countrys
industrial achievement was in scale and complexity unique outside Europe and North America
before 1945.

There are number of points of controversy about japans economic growth in these years which
it will be necessary to discuss. One is Meiji developments were a natural, or even inevitable,
sequel to what had already taken place under the Tokugawa, leaving aside entirely the changes
caused by the coming of the west. Second, economic policies is important respect a response
to the dangers that were held to be inherent in Western imperialism.

FOUNDATION, 1860-1865

modern economic growth is marked by the presence of port as an attribute. Most Japanese
societies have expertise in finance and commerce but not in manufacturing, while a few
members of the ruling class had some knowledge of Western science and technology. Later, in
the Tokugawa years japan had not yet entered the phase of modern growth, but was arguably
moving in that direction.

Japan was trying to improve economic opportunity by providing access to foreign markets,
technology, and institutional models. By posing a threat of colonial or semi-colonial
dependency, they prompte military reform at the heart of government concerns. In Tokugawa
era, industries which had a military purpose was continue after 1868, but it was not until 1874
that Okubo Toshimichi, he argued that the country needed an increase in productive power
which could only obtained through manufacturing industry. A major part of their work was to
improve transport and communications (offices, a domestic telegraph system, railway,
shipping services).

One beneficiary was the former Tosa samurai, Iwasaki Yataro, founder of a firm which in 1873
became known as Mitsubishi. He acquired an existing shipping line which operated between
Tokyo and Osaka.

Minister were also concern that japan should have a financial system capable of funding foreign
trade and modern enterprise. In 1872, by providing a tax on the American model makes japan
causing issues and bankruptcy as well as the yen currency was worth no more.

During 1860, japan had developed an export trade, concentrating on tea and silk, much like
Chinas. Also, in the Tokugawa period by making two kinds of import. First, Western
manufactured goods and there were machines and other equipment (including weapons)
require for the modernization programme but also improvements in standardization and
quality. So, japan sent some student to European silk industry acquire knowledge if they want
to get a better quality.

Tokugawa period had not proved to be advanced enough in their technology to obviate the
need for costly purchases abroad. The Bakufu yards at Nagasaki and Yokosuka taken over by
the Meiji government, were expanded.

Agriculture also play important role in the economy, not least because it provided a large
proportion of the resources needed for modernization but also government also played a part
in achieving it. Agricultural colleges were established in Sapporo (1875) and Komaba (1877),
by provided technical advise to local societies formed by landlords and farmers. As a result
there was improvement in seed strains and planting techniques, pest control become more
efficient, and fertilizer came to be used more generally and in greater variety.

There was no significant consolidation of land holdings, and little change in the size of the
farm labour force or in the use of farm machinery. In other words, Japanese agriculture
continued to rely on the intensive cultivation of small plots-whether owned or rented by family
labour.

INDUSTRIAL GROWTH AND FOREIGN TRADE 1885-1930

In considering what happened to the Japanese economy after 1885 it is appropriate to place the
emphasis less on government initiatives, more on the part played by private enterpreneurs and
private capital. One example is to be found in the way foreign trade was conducted. Partly
because of the advantages which foreign merchants enjoyed under the treaties, partly because
Japanese merchants lacked experience of overseas markets, and had no effective banking
machinery at their disposal, exports and imports were handled almost entirely by foreigners in
the first twenty-five years after the ports were opened, Japanese were similarly in control of
the buying and selling of foreign trade commodities within Japan. The Mitsui trading company,
founded in 1876, was an outstanding example during that time.

Back in 1860, Japanese was struggle until the mid 1880s until they were no longer in doubt to
capitalist or Western because during this time they try to be able to live with their own skills,
capability, natural resources, and interference from outside parties.

Silk production in Japan continued to expand throughout the period. By 1929 about 40 per cent
of farm households had raising as their secondary employment. In 1893, Japan had 3.200
reeling factories employing ten persons or more but by 1929 reeling was almost wholly a
factory trade, carried out in fewer but larger filatures.

The larger business firms, as well as banks, provided loans and advances, on which many small
scale producers relied, but they did not as a rule engage directly in manufacture.

The development of the cotton industry was no less rapid, but it was not until Shibusawa Ei`ichi
founded the Osaka Cotton Spinning Company in 1882, using the less expensive varieties of
Western technology, but compensating for its relative inefficiency by employing cheap labour
on all-night shifts, he was try to persuaded to change from tradition to modern methods and
equipment. After 1913 cotton was more and more being used to weave piece-goods, both for
export and for domestic market, rather than being sent abroad as yarn.

In 1930, the importance textile in Japan`s economic development is indicated by increased.

The next largest sector being food and drink. Nevertheless, the most significant change in the
direction of growth after 1900 was the shift towards large scale heavy industry.

Two special factors influenced the growth of heavy industry. One was war, by victories over
China (1894-5) and Russia in 1904-5 Japan became a world power, entering into rivalries
which required a much larger military establishment than in the past. In 1914-18 during the
world war had two further effects: first, it provided an export demand for the product of
Japanese heavy industry, and it reduce for a time the availability of foreign machinery of almost
every kind. Thus war made for faster growth in heavy industry than might otherwise have taken
place. Coal mining proved to be the least in need of government support among the heavy
industries. Owned by some of Japan`s largest companies-Mitsui. Ship building was one of the
more important customers for iron and steel, though by international standards the industry
remained of modest size. In other fields of engineering progress was more patchy. The
manufacture of steam locomotives and electrical equipment began just before the war with
China in 1894-5. In fact, machinery and vehicles remained heavily dependent on imports for
machine tools, automobiles and internal engines.

Among imports, raw cotton was of primary importance, rising from less than 1 per cent of the
total in 1880 to 34 per cent in 1910. By contrast, Britain, which had been the main supplier of
both machinery and manufactures in the nineteenth century (1920s).

THE ECONOMY IN THE 1920s

Japanese industrialization and economic could not characterized as modernization in the West
because of inherited differences and Japan retained enough financial independence to resist the
pressure making for conformity. Japan did not require heavy capital inputs from abroad and
had no considerable foreign debt before the Russo-Japanese War. The West provided
technology, plus a knowledge of methods of business organization, but it had no great part in
ownership or management. That increased the scope for modification of the Western model.
At the end the first world war brought a world wide slump, in which Japan industry lost its
easy wartime markets overseas. Then a catastrophic earthquake struct the Kanto region in
September 1923, destroying much of Tokyo and Yokohama. This impeded recovery by making
necessary diversions of capital to reconstruction.

The capitalist during the 1920s in Japan gave much more competition to japan especially
towards technology. They also controlled a large proportion Japanese industry. The Big Five
(Mitsui, Mitsubishi, Yasuda, Sumitomo, and Dai Ichi), together capitalized at fifty million yen
in 1914 and 280 million in 1927, controlled 19 per cent of private banking capital by the end
of the period.

The outstanding examples of large scale business were great combines known as zaibatsu, each
handed by family holding company. Mitsui had been existence since the 7th century, engaged
in domestic retailing and finance. Next largest was Mitsubishi, which began in the Meiji period
with Iwasaki Yataro`s shipping interest, foreign trade, mining, shipbuilding, and variety of
other investment in heavy industry, which actually include aircraft and automobiles. Sumitomo
also a bank founded in 1880, which unlike the others was based in Osaka, developed from a
pre-modern firm engaged in copper-mining. Yasuda was the creation of yet another ex-samurai
founder in early Meiji, who acquired his holdings in the modern sector of industry through an
initial stake in trade and banking. In fact, banking was a crucial factor in the growth of all four
of these concerns.

Those named above-were engaged in everything from domestic commerce to foreign trade,
from textiles to heavy industry, form finance to armaments, gave them a resistance to economic
downturns and hence an advantage over their competitors which put them in a class of their
own in Japanese business.
The difference between large and small concerns with respect to capital, technology, and
organization were paralleled by differences in matters of management and labour. The smallest
relied heavily on family members in both capacities. By contrast, the zaibatsu and other major
employers began from about 1900 to look to the universities for management recruits, as did
the bureaucracy. Both Mitsui and Mitsubishi took graduates from Fukuzawa`s Keiro Gijuku,
later from Tokyo University as well. To provide a more specifically business training, Tokyo
higher Commercial School was founded in 1887. These above all were the men who introduced
a professional approach into Japanese management who had studied economics: who read
books about American business methods, who made decisions about the introduction of new
technology with a scrupulous care for return on investment.

Improvements in farm productivity had released a good deal of labour to the towns, but much
of it, despite the virtues of the education system, was unskilled or semi-skilled, aiming at best
jobs in commerce or the service industries. Managers of factories using advanced technology
therefore faced two problems in this situation. They had to find workers who were skilled and
also ways of keeping them, rather than see them drift away to other employment, or be poached
by competitors.

Farmer would have claimed that they were expected to pay an even greater one. Agricultural
production had continued to increased after 1900, but more slowly, as Japanese farming
approached the limits of what could be done without radical change in landholding and
methods of cultivation.

Since the number of farm workers actually declined in the years. Despite this, agriculture was
steadily losing its pride of place in the national economy. As population grew, farmers were
becoming a smaller part of it. They produced much less of the national product than before,
because commerce and manufacturing were expanding faster, even though some of them
diversified into higher value crops. Nor could they any longer feed Japanese people without
outside help. Japan become net importer of rice soon after 1895, and by the end of 1920s was
importing as much as ten million koku a year, in addition to other foodstuffs.

As a result, many farmers were in difficulties some time before the next world slump in
international trade in 1929 and 1930, which compounded their problems by causing a sharp
fall in the returns they could get from silk.