Early Meiji Industrialization
Before industrialization on a nation-wide population created a labour market, attracting
scale can take place, there must exist: (1) a
sufficiently high level in the production and
circulation of commodities and in the division of
labour, (2) a certain accumulation of capital in
the hands of the producers and, (3) the existence
of an adequately large body of free labour.
A high level of trade and handicraft
manufacture (as distinct from machine
manufacture) had already reached in the
Tokugawa period. This trading activity was made
possible by production for the market. The
demand for goods was stimulated, in turn, by the
rapid growth of cities attendant upon by samurai
in castle towns and the brisk movements of
transport and trade activities connected with the
sankin-kotai system.
The division of labour, the chief cause of
increasing productivity, had advanced far enough
for there to be a distinct line of demarcation
separating the production of raw materials (by
workmen’s guilds) and the manufacture and sale
of commodities (by monopolistic wholesalers).
Together with this went regional specialization,
producing 1 or 2 kinds of goods in large quantities
for the market and bought other things
themselves, which they did not produce.
As to the 2nd condition, the chief agents
in the accumulation of capital were traders and
usurers, and in this connection the role of the
Osaka fudasashi (rice brokers and agents) was
particularly important. The Japanese relied upon
monopoly as well as on intervention and
protection by the state, and was likewise marked
by a hunger for bullion and a “fear of goods.”
The creation of a labour market was
facilitated by the Meiji Land Tax Revision, which
acted as a mechanism hastening the trend
towards the dispossession of the peasantry, as it
created private property in land and required the
payment of land tax in cash. This dispossessed
peasantry, which formed the reservoir of
Japanese stagnant and potential surplus
small-scale manufacturers to the countryside.
Further, the invasion of cheap foreign
commodities, especially cotton yarn, together
with the products of Japanese machine
manufacture, ruined the household industry,
thus accelerating the division of labour and
facilitating the creation of a home market for the
disposal of manufactured goods. This creation of
the home market greatly stimulated Japanese
industrial development.
Although a wide field for industrial
investment lay fallow, the merchant princes were
reluctant to become pioneers in working this
field; so the government with the aid at first of
loans from these magnates and together with its
limited revenues, had itself to develop industry.
Thus, early Japanese capitalism grew under the
shelter of state protection and subsidy. From this
very early interest in credit and banking
operations to the exclusion of other fields of
investment, private capital in Japan was given a
great start by the government’s policy of subsidy
and artificial encouragement.
In those industries, which turned out
products to compete either in the home or
international markets with the products of other
capitalist countries, trusts or cartels were formed,
(notably in textiles). In Japan, banking and loan
capital, leaning heavily upon the state for
support, was used in turn by the government to
create those branches of industry requiring a
greater capital investment.
Therefore, in Japan industrial capital did
not develop independently; the state initiated
industrialization, developed it and turned it over
at amazingly low rates to a few private
enterprises, mostly representatives of the great
banking houses. With the tumultuous years
following the war for the Restoration, the first
stage of industrialization in Japan was
inextricably interwoven with the military
problem, and this fixed the pattern for its later
Early Meiji Industrialization

evolution. Technology was still at a pre-capitalist step was to sell a large portion of these industries
stage; the spirit of enterprise among the capitalist to the handful of trusted financial oligarchs (the
class was still timorous and capital accumulation most distinctive characteristic of the history of
on a very low level. Japanese industrialization).

For these reasons and on strategic
grounds as well, it was necessary for the state to
undertake the centralization and further
development of these industries. The Meiji
Government confiscated the Bakufu’s military
establishments and came forward as the chief
entrepreneur in mining and heavy industrial
production. Foreign instructors were engaged in
order to raise the technical level of arsenal
workers, and such institutions as the Juho
Kyoikujo were established for training in the
manufacture of guns.
This policy greatly enhanced the power
of the financial oligarchy, in particular, the
Zaibatsu, which through the tremendous leverage
given by their interlocking control over banking
on the one hand and industry and commerce on
the other, have been able to swallow lesser
industrial concerns. But control over the most
vitally strategic enterprises, such as arsenals,
shipyards and some sectors of mining were kept
in government hands. This great expansion in the
armament industries had the effect of stimulating
the drive for self sufficiency in Japanese industry.

Great shipyards in the country were also

taken over. In mining, in order to increase
production, the government employed some of
the best foreign experts they could secure. The
construction of railways served the important
task of opening up the home market. Looking at
it from the politico-military view, the railroads
were regarded as one of the most useful
instruments in national unification.

The value of the telegraph in modern

warfare may be seen in the effective use, the
government made of it to outmaneuver the
Satsuma rebels in 1877. For training in
engineering, government technical schools were
established with foreign instructors, while the
best Japanese students were sent abroad to
master the most up-to-date technique, to replace
foreign advisers on their return.

It was the Meiji policy to bring under

government control the arsenals, foundries,
shipyards and mines formerly scattered among
various han or Bakufu domains, then to
centralize and develop them until they reached a
high level of technical efficiency, while at the
same time initiating other strategic enterprises
such as chemical industries (sulphuric acid
works, glass and cement factories); and the last