Economic Development of Japan
大
正
時
代
No.6 WW1 and 1920s
Society, Economy, Diplomacy: 1910s-20s
• WW1 brought a huge export-led boom to Japan. This
solved fiscal and BOP problems (for the moment).
• The bubble burst in 1920 and a recession period began.
• FDI and import substitution in heavy industries
proceeded, and new zaibatsu emerged.
• Taisho Democracy and the rise of social movements
(labor, farmers, women, “outcasts,” socialism)
• Shidehara Diplomacy—use non-military means
(diplomacy) to secure trade benefits, Japan-US
friendship and Chinese interests.
Real GNE Growth (5-year moving average)
8%
Taisho
Late Meiji
7%
Early Showa
6%
5%
4%
3%
2%
1%
WW1
1935
1933
1931
1929
1927
1925
1923
1921
1919
1917
1915
1913
1911
1909
1907
1905
1903
0%
Estimate by Ohkawa, Takamatsu, Yamamoto
1920s
• WW1 Bubble burst and recessionary period begins
• Machinery, chemical, heavy industries expands
• Electrification (hydraulic power generation) rises
World War I and Export-led Boom
PP.100-02
• Export-led demand pushed up prices, profits and
production—artificial acceleration of import
substitution, esp. in machinery and chemicals.
• BoP crisis (gold reserve loss) was solved.
• Narikin emerged (Suzuki, Ship Narikins). They
spent money on big villas, parties, women.
Trade (bil yen)
Production
Ship rental (yen/ton)
New ship (yen/ton)
Nippon Yusen profit
(mil yen)
1914
3
50
1917
45
1000
4.84 86.31
Ship Narikin
3
2
Export
1
Import
0
1914 →18
1904
1912
1914
1916
Silk
+60%
Cotton
+8%
Domestic Supply Ratio
Iron
+193%
Iron
Shipbuilding +700%
Steel
Dye
+1600% Industrial production
1918
1920
1924
1928
1913 1919
47% 65%
34% 47%
New Zaibatsu (Konzern)
PP.104-5
• Heavy & chemical industries (not banks, textiles, trade)
• Backed by political connection and support
• Active investment in Korea and Manchuria (NE China)
Name
Nissan 日産
（Japan Industry）
Riken 理研
Nicchitsu 日窒
Nisso 日曹
Mori 森
Features
Current firms
Cars, chemicals, machinery,
fishery, mining;
Raising fund in stock market;
Invest in Manchuria
Hitachi, Nissui,
Nissan Motors,
Sompo Japan,
Japan Energy
Chemical, medical research
Riken（Res. Inst.)
Fertilizer, medicine, metals
Chisso
Sodium hydroxide (NaOH)
Nihon Soda
Aluminum, ammonia, iodine
Showa Denko
Major FDI Firms in 1910s-30s
Year
Japanese name
17 1917 Yokohama Rubber Manuf.
18 1918 Japan-US Sheet Glass
19 1920 Sumitomo Electric Cable
20 1922 Asahi Silk Weaving
21
22
23
24
25
26
27
28
29
30
31
32
33
1923
1923
1925
1927
1927
1927
1928
1928
1929
1931
1931
1932
1932
Fuji Electric Manufacturing
Mitsubishi Electric
Japan Ford
Japan General Motors
Japan Victor
Daido Match
Japan Columbia Phonograph
Toyo Babcock
Japan Benberg Silk Fiber
Mitsubishi Oil
Sumitomo Alminum Smelting
Toyo Otis Elevators
Japan Submarine Cable
Foreign
Remark
ownshp
F.B. Goodrich (US)
50% Goodrich sale from 1912
Libby Owens Sheet Glass (US) 35% 1922, under Sumitomo
Western Electric (US)
25%
Vereinigete Glanzstoff
20% 1929, under Nicchitsu
Fabriken (Germany)
Siemens (Germany)
30% J side: Furukawa
Westinghouse Electric (US)
10%
Ford Motor (US)
100% Previously, sales
General Motors (US)
100% through agents
Foreign partner
Victor Talking Machine (US)
100% 1937, under Nissan
Sweden Match (Swe)
50% 1932, under Nissan
Columbia (UK)
59% 1935, under Nissan
Babcock & Wilcox (UK)
71% Boilers, steam turbines
J.P. Benberg (Germany)
20% 1933, merged with no.20
Associated Tidewater Oil (US) 50% J: Mitsubishi Corporation
Aluminum Co. of Canada (Can) 50%
Otis Elevators (US)
60% J: Mitsui Corporation
Int'l Standard Electric (US)
12% Under Sumitomo
Source: S.J.Bytheway (2005), pp.166-169
Major FDI Firms in 1910s-30s (contd.)
Year
Japanese name
34 1933 National Cash Register
35 1937 Japan Watson
36 1939 Shibaura Kyodo Industries
Foreign partner
National Cash Register (US)
Watson Computing Tabulating
Recording Machine (US)
United Engineering (US)
Foreign
ownshp
100%
Remark
100%
--
J: Shibaura
Source: S.J.Bytheway (2005), pp.166-169
Compared with Meiji Period,
• The number of US FDI increases.
• FDI in automobile, electrical, machinery.
• Zaibatsu plays key role in FDI partnership or subsequent takeover.
At the same time, Japan’s outward FDI begins:
• FDI to China: textiles (Shanghai, Qingdao), steel (Anshan)
• FDI to Korea: heavy chemical industries
Democratic
institution
(Form)
Constitution
Laws
Parliament
Election
Court
Full
democracy
US rule
Showa2
1960
Now
1945-51
Democratization
New constitution
LDP dominance
Lack of policy debate
Military rises
1931 Democracy
movement,
Party cabinet
1937
Defeat
War
Male suffrage 1925
Showa1
Taisho
Constitution 1889
Parliament
Fascism 1937-45
Edo
Pure
dictatorship
Meiji
Political fights
Reform vs conservatism, big vs small
government, other policy debates
(Content)
Political
competition
Early Meiji
1881
1889/90
WW1/Taisho
1877
X
JapanJapanChina War Russia War
1894-95
1904-05
External
military Saigo
campaign Former samurais
Colonize
Korea
1910
Fiscal activism & war
Top-down
Okubo
industrialKuroda
ization
Okuma
Fiscal crisis
Expelled
Government
Spending!
Top-down
democrat- Kido
Inoue
ization
Itagaki
Ito
Bottom-up
democratization
Itagaki
Ueki
Nakae
(Liberty Party)
Yamagata
Conservatives
Military
Constitution
Parliament
Big
spenders
Ito
Hoshi
Okuma
Fukuzawa
Export-led
boom solves
fiscal crisis
Seiyukai Party
Taisho
Democracy
Opposition
Tax cuts!
Taisho Democracy – Political Development
Anti-party
conservatists
genro, military,
bureaucrats
Yamagata, Katsura
Cooperation & fights
Alternating governments
Seiyukai Party
Big spending
for securing
rural votes
Saionji, Hara
Army’s misuse
of power, 1913
Navy’s bribery
scandal, 1914
Opposed to
universal suffrage
Rice Riots,
1918
1913
1914
Popular demonstration
surrounding Parliament
to protect constitution
1924
X
Pro-Constitution
3-Party Cabinet
-Universal suffrage, 1925
-Army budget cuts
-Shidehara Diplomacy
Rikken
Seiyukai Party
Reform Club
Kenseikai
(Minsei Party)
Belt-tightening,
workers rights
PP.226-7
Meiji Constitution
Article 4 —The Emperor is the head of the Empire, combining in Himself
the rights of sovereignty, and exercises them, according to the provisions
of the present Constitution.
Article 55 —(1) The respective Ministers of State shall give their advice
to the Emperor, and be responsible for it. (2) All Laws, Imperial
Ordinances, and Imperial Rescripts of whatever kind, that relate to the
affairs of the state, require the countersignature of a Minister of State.
(1) Can Emperor really make decisions or just follow advice?
(2) Is party cabinet (“parliamentary system”) possible?
Emperor decides
Emperor
？
Cabinet decides
Emperor
Individual
advice
Collective advice
& responsibility
？
-Appointed by Genro?
Army
Navy
Individual ministers
PM
Cabinet
-Party with largest
parliament seats?
Prof. Tatsukichi Minobe (1873-1948), Tokyo Univ.
<Organ Theory of the Emperor>
-The state, as a legal entity, has the sovereignty.
-The emperor is the highest organ of the state, and
operates under Constitution (not unlimited power)
<Justification for party cabinets> (Article 55)
-Cabinet must take collective responsibility  Same political party
-Imperial orders must have Minister’s signature  Cabinet’s power
Prof. Sakuzo Yoshino (1878-1933), Tokyo Univ.
Democracy develops in 3 steps to achieve results:
(1) Party cabinet where the largest party forms government
(2) Universal suffrage, to expand voter base
(3) Social policies, to directly improve people’s lives
Yoshino proposed minpon shugi民本主義 to promote democracy
under Meiji Constitution where Emperor had sovereignty.
Other Social Movements in Taisho
• Emergence of new middle mass
(professionals, salaried workers)
• Universal (male) election (1925)
• Labor movement and May Day (1920)
• Landless farmers’ riots and formation
of farmers’ union (1922)
• Women’s movement--Seitosha (Blue
Stockings Society, 1912), New
Women’s Society (1920)
• Zenkoku Suiheisha (National Level
Society, 1922) to fight discrimination
against “outcast” people
• Rise of socialism and Marxism
Universal suffrage movement
Voters/Population
Shidehara Diplomacy
PP.106-9
Kijuro Shidehara, 1872-1951
Foreign Minister, 1924-27, 1929-31
Prime Minister 1945-46
His policy was more moderate than before or after him
• Maintain good relations with US and UK
• Respect Washington Naval Disarmament Treaty (1921-22)
• Hamaguchi Cabinet signs London Naval Disarmament Treaty
despite objection from military (1930)
• No military intervention in China; secure Japan’s economic
interest through diplomacy and negotiation
• When China protests and resists, his diplomacy breaks down
• Domestically, criticized as Coward Diplomacy
• Failed to stop Manchurian Incident (1931) started by Kantogun
(Japanese Army stationed in China)
Japan-US Relationship
• Largest trading partner: US share in Japan’s trade—
export 44%, import 26% (in 1925)
• In China--Japan asserts its “special interests” in China,
US wants open door policy (esp. for bank loans)
• Immigration Problem
1890s Japanese economic immigrants to US West Coast;
Anti-Japanese movement begins
1907 Gentlemen’s Agreement to curb Japanese immigration
1913 Anti-Japanese legislations in California
1924 Ban on Japanese immigration
1942 Japanese Americans are sent to
concentration camps
Manzanar Camp, California