A History of Japan: From Stone Age to Superpower (53 page)

He was replaced by one of It
’s protégés, the court noble Prince Saionji Kinmochi (1849–1940), who had also become president of the
Seiy
kai
party. Like It
in later years, Saionji was reasonably well disposed
towards party politics. Under him Japanese politics entered another phase of relative stability for the remainder of the Meiji period. At one stage the harder-line Katsura even returned to office. Relations between the still transcendental cabinet and the Diet were reasonably trouble-free, with party politicians feeling they were making slow but steady gains.

However, particularly under Katsura’s return to office in the years mid-1908 to mid-1911, there were reminders that democracy in Japan still had an authoritarian flavour to it.

In 1910, in what was known as the High Treason Incident, hundreds of left-wing sympathisers were interrogated in connection with what the authorities felt to be a widespread plot to assassinate the emperor. Twenty-six were secretly tried. Evidence against the five main suspects seemed quite strong, but was questionable for the others. Nevertheless, 24 were sentenced to death. Of these 12 had their sentences commuted; the remaining 12 were executed in January 1911.

The incident followed a series of repressions of left-wing activity during the last decade of Meiji. Party politics was one thing, but socialism was another. Like Christianity, it never seems to have taken root in Japan, though it can be argued that it was never given a chance. In any event, socialists had to keep a very low profile in Japan till the end of the Second World War.
⁷¹

As a result of the High Treason Incident, a Special Higher Police Force was established in 1911. This was the notorious ‘thought police’. While democracy might be advancing in terms of outward structure and institution, the same was not necessarily true of the inner substance. This duality was merely the continuation of a long tradition. So too was the lack of real democracy.

4.6   Guided Economic Development

Japan’s economic development was another aspect of the nation’s modernisation that impressed westerners. Japan already had a number of key factors of production in place at the start of the period, and it made the most of these, as well as developing others. It had:

•
a large workforce;

•
an educated workforce;

•
a generally obedient workforce;

•
an agricultural workforce of such size that a significant portion could be shifted into the industrial sector;

•
accumulated capital in the private sector (mostly merchants);

•
established business practices of some sophistication;

•
despite overall limitations in its natural resources, a reasonable initial supply of basic energy sources in the form of wood, water, and to some extent coal and even iron (ironsands).

What it lacked was technology and entrepreneurs.

The deficiency in technology, which included both equipment and expertise, was fairly rapidly made up. This was largely done by importing foreign equipment, employing numerous western technical advisers, and sending Japanese overseas on study tours. Japan had missed out on the Industrial Revolution but on the other hand it benefited from being a ‘late developer’. It could make use of ‘state of the art’ technology that other nations had only developed after a century or more of costly trial and error.

As for entrepreneurialism, this could clearly not be left to foreigners. It should be Japanese people themselves who established and kept ownership of at least the major modern industries. In general the merchant houses from the Tokugawa period were not especially willing to take up the challenge of establishing modern industries, which they saw as too risky. Mitsui and Sumitomo were in fact the only major houses to do so. Rather, in most cases entrepreneurial initiative was taken either by the government itself or by the same ‘class’ of lower-ranking samurai – often with peasant associations – who formed the government.

Meiji Japan’s two best-known entrepreneurs, Iwasaki Yatar
(1835–85), the founder of Mitsubishi, and Shibusawa Eiichi (1840–1931), the founder of the Osaka Spinning Mill and many dozens of other companies, both came from this type of peasant-samurai background. Both of them represented self-help in action. Shibusawa in particular was favoured by the government, for he frequently proclaimed that business success should be achieved for the good of the nation as well as the individual. This was exactly what the government wanted to hear. His philanthropism, seen in founding schools and homes for the elderly, also made him popular among the public. He helped greatly to remove for good the stigma that had often been attached to money-making in Tokugawa times. The government was again grateful to him for this, for such a stigma could have proven a problem for Japan’s successful economic development.

However, at least in the early years, the government was disappointed at the lack of private entrepreneurs. It ended up having to establish many enterprises by itself. The hope was that these would serve as successful models for private industry to follow, but in practice results were often poor and uninspiring. The railway was one success, and whereas in the 1870s almost all railway construction had been by the government, by 1890 some 75 per cent of it was being done by the private sector. On the other hand, the government’s ventures in the textile industry were notoriously unsuccessful. Fortunately, in their stead, Shibusawa’s privately built and owned Osaka Spinning Mill proved a successful model. During the 1870s the government also set up factories in industries such as munitions, brick, cement, and glass, and took over a number of mines and shipbuilding yards.

Despite the government’s hopes and efforts the economy did not fare too well in the early years of Meiji, and the nation was facing a financial crisis by the end of the 1870s. Causes included not only the poor performance of some of the government’s own enterprises, but heavy expenditure on foreign advisers, the payments to former
daimy
and samurai, the expenses incurred in the Satsuma Rebellion of 1877, and a relative lack of hard currency to back up paper currency. Serious inflation set in. Rice prices, for example, doubled between 1877 and 1880.

As one counter-measure the government announced in 1880 the sale of non-strategic government-run industries. There were few takers, and eventually the government had to dispose of the industries at well below cost – in some cases below even 10 per cent of their cost value.
⁷²
Sales were often made informally, without tender, to people with whom the government already had associations and were considered reliable. These people obviously felt an obligation towards the government, which helped the already growing bond between government and big business interests. The sale also helped concentrate much of industry into the hands of a small number of increasingly large organisations – later known unflatteringly as
zaibatsu
, or ‘financial cliques’.

Other counter-measures included the establishing of a central bank (the Bank of Japan, in 1882) and a budget surplus that would build up hard-currency reserves. The tight measures caused some hardship in the agricultural sector in particular, but on the other hand this helped shift labour into the more modern industrial sector. By 1886 Japan had a stable financial system, with low interest rates, and the economy entered an upswing. From this point on Gross National Product was on average to grow steadily by over 3 per cent per annum till the end of the Meiji period. Exports, which the government was keen to promote, were also to grow steadily, rising from around 6–7 per cent of GNP in the late 1880s to around 20 per cent by the end of Meiji.
⁷³

Despite the advance of industrialisation, the Meiji economy overall was dominated by agriculture, which occupied more than half the workforce throughout the period. Nevertheless, the value of agriculture as a proportion of Gross Domestic Product fell steadily, from 42 per cent in 1885 to 31 per cent at the end of Meiji. By contrast, the manufacturing sector’s proportion over the same period more than doubled from 7 per cent to 16 per cent.
⁷⁴

Within manufacturing, the light industry of textiles was particularly important. The government promoted domestic textile production as a means of cutting down on imports, often encouraging potential entrepreneurs by providing cheap equipment. Mill owners could also make use of very lowly paid female labour, and could locate their premises in rural centres. This meant cheap site costs and ready access to local agricultural workers wanting convenient by-employment. Textile output rose from around 25 per cent of total manufacturing output in 1880 to 40 per cent over the next 20 years.
⁷⁵
In a survey of non-government factories in 1884, 61 per cent were found to be in textiles.
⁷⁶

During the last decade or so of Meiji, electrical goods quickly developed as another important manufacturing industry. Though western ownership was discouraged, Japanese companies in the field often formed joint ventures with western companies in order to acquire western technology. Today’s well-known giant NEC (Nippon Electric Company) was started in 1899 as a joint venture between the American company Western Electric and its Japanese agent. Another giant, T
shiba, started from a joint venture in the early 1900s between America’s General Electric and two Japanese companies, T
ky
Electric and Shibaura Electric (part of the Mitsui group).
⁷⁷