MEIJI AGRARIAN REFORMS, LAND SETTLEMENT & INDUSTRIALISATION

SASANBHA LYTAN

Q. What was the Meiji Modernization Programme (1868-94)? Assess its impact on Japanese society and economy.

Q. Review the important financial and economic measures taken by the Meiji State. What were the special
characteristics of capitalist development in Japan?

Q. Review the important economic and financial measures taken by the leaders of the Meiji Restoration in the period
1868-94.

Q. Analyse the land settlement and agrarian reforms of Meiji government. In what ways were they linked to the
process of industrialisation?

Q. Discuss the salient features of Meiji agrarian settlement. What was its impact on Japanese society and economy?

Andrew Gordon states that within a decade, the new government during the Meiji Restoration period brought about a
revolutionary turnaround in the economy, society, polity and culture and set in motion the transformation Japan from a
feudal state to a modern industrialized, capitalist nation. Hugh Borton says Japan was a fragmented feudal county, the
treasury was empty, there was no standard currency, peasantry was excessively taxed and government excesses were the rule
of the day; there was no unified army, daimyos maintained their own troops, and there was no navy to defend it against
external threat. Andrew Gordon says that foreign pressure to open Japan and the bakufu’s soft response by signing the
unequal trade treaties with the European nations one by one ultimately weakened the bakufu and strengthened the
emerging national consensus, especially amongst the Tozama lords, who spearheaded the Meiji Restoration. In such a
situation, the new government’s most pressing task was to strengthen Japan economically. While examining the agrarian and
industrialization policies of Meiji Japan, most historians often tend to obscure the contribution of agrarian reforms towards
industrialization of Japan. However the agrarian settlement was integral to the economic modernization of Japan.

AGRARIAN REFORMS:

1. Abolition of Domains and Pensions :

 Prior to the Meiji period, Japan was a feudal economy, with agriculture at its centre. The Meiji government in
1868 began by abolishing the domains of the daimyo. Over a period of three years, leaders of the new
provisional government convinced the daimyo to surrender their lands, laying the foundation for the agrarian
and political unification of Japan.

 By 1870 this process was complete and all daimyo were appointed governors of their former domains, whilst
still retaining effective control.

 In August 1871, the Emperor formally abolished all the domains, which were consolidated into 72 prefectures,
headed by centrally appointed governors. The power to collect land tax was transferred from the daimyo to
these centrally appointed governors.

 A financial settlement was made granting the daimyo a yearly salary, equivalent to about 10% of their former
annual tax collection, according to Andrew Gordon. The government inherited the daimyo’s liability towards the
Samurai, paying them a pension too. This was a beneficial settlement for the daimyos as the government
underwrote their previous debts and took on their former liabilities. They also supported the Samurai who were
now paid a pension by the government.

 This policy of paying a pension to the daimyo and the samurai, proved a financial burden for the new
government as in 1871 out of 42.5 million government expenditure, 15 million went towards paying Samurai
stipends alone. Thus in 1873, the government announced that stipends would be taxed and gave the samurai the
option of commuting their stipends into government bonds at 5-7% interest, thus providing some relief to the
government.

 Yet, the government still had to pay interest on the bonds, and thus by 1876, it imposed forced commutation of
all feudal pensions to bonds. This served the purpose of securing funds for industrialisation and militarisation
while simultaneously guaranteeing the support of the politically disaffected classes for the Meiji regime.
 2. Social Changes:

Accompanying this there were changes in the social structure which the government initiated. Keeping with the abolition of
feudalism, in 1869 the government reduced the numerous samurai ranks to two – upper samurai (shizoku) and lower
samurai. In 1872 majority of lower samurai were reclassified as commoners (or heimin), still receiving their stipends. In
1876 they were stripped of their traditional privilege to bear swords. By 1870 non-samurai classes were classified as
commoners. Other changes in the social order constituted, removal of restrictions on travel, dress and hairstyle.

The peasantry under the Tokugawa regime was subject to a high tax burden imposed by the lord who was usually indebted
to the wealthier trader and artisanal classes. The peasantry was subject to restrictions on moving out of their domains and
selling or dividing their lands. The new system abolished restrictions on movement as well as private ownership/sale of
land. These changes were favourable for the rise of capitalism. The government also ended legal discrimination against
hereditary outcaste groups such as eta and hinin. This fluid social order benefitted the educated and moneyed classes
specially the landowners, moneylenders, and rural elites. Some educated samurai also fared well but the landless peasantry
however continued to live in dire poverty, later forming the labour for industrialization.

3. Land Tax Reform (1873) :

 The most important measure in the agrarian sector introduced by the Minister of Finance, Okubo Toshimichi,
was the private ownership of land through the Land tax reform of 1873. According to Kozaburo Kato the land
confiscated by the new government amounted to 1/3rd of Japan’s total tax assessment.

 The government met its early expenditure, especially payment of stipends by – (i) issuing paper currency and
(ii) by collecting land taxes under the old tax system. Under the old land tax system, land was valued in terms of
rice production, but with the introduction of the private ownership of land, land value needed to be calculated in
monetary terms, and tax collected in cash.

 The new government hesitated to introduce a new cadastral survey to determine land value as it would invite
peasant resistance.

 Kohei Kanda, a scholar solved this problem- he recommended the sale of arable land in perpetuity through the
issuance of title deeds (chiken), by local government officials, which would bear the location, type, owner and
price of land. Land price was fixed by the government as Okubo devised a formula to set the value of land. It was
determined that the value of the crop was equal to 6% of the value of the land. Thus the value of land was 16
and 2/3rd times the value of the crop. The government could tax the land value noted in chiken, without a
survey of arable land.

 Thus the 1873 Land Tax Reform included the following provisions:

1. Complete abolition of the old taxation system

2. Implementation of land price survey with chiken issued to all owners,

3. The national tax was fixed at 3% of the land price or half the value of the crop (keeping in mind the
Tokugawa average tax rate, i.e. 50%) and additional local taxes were not to be more than 1/3 rd of the
national tax.

4. Land values were also set for privately owned residential lands, forests, grasslands and wetlands,
only if proof of a cash purchase could be produced thus many lands lapsed to the government, when
proof couldn’t be produced specially forests .

The tax reform was completed by 1881 with 120 million chiken issued. The impact of the land tax reform can be seen in
the close match between the estimated tax and the actual tax collected in contrast to the Shogunate period. In 1881 Kozaburo
Kato says the land tax was estimated at 51.22million yen, and the actual revenue collected was 48.72 million which almost
matched the estimated amount of 3%. The most important impact of the land tax reform and social change was that private
property rights and a unified tax system were established which was essential for capitalist development of the economy.
LINK BETWEEN AGRICULTURE AND INDUSTRIALIZTION:

The agrarian measures initiated by the Meijis were intrinsically linked to the process of industrialization, which
converted Japan into a formidable economic and military power by the early 1900s.

 Irving I. Kramer points out that Japan followed a dual approach to economic stabilization- one of land reform
accompanied by industrial development.

 The Meiji government needed to raise capital to fund the industrialization and technological modernization of
Japan. However, it did not want to rely on foreign loans nor could it raise capital from the trade sector as trade
tariffs were fixed by foreign powers according to the “unequal treaties”. Thus the Meijis were left with no option
but to raise capital internally for industrialization, majority of which came from the agrarian sector.

 Andrew Gordon points out that the agrarian sector fuelled industrialization in many ways.

1. It was a critical source of capital as land tax constituted 80% of the government’s income in the
1870s and early 1880s. This figure slowly fell to 60% by the 1890s, as consumer goods began to be
taxed.

2. Secondly this sector provided labour for industrialization. The rise in the population of Japan from the
1880s was accompanied by a shift of the rural population to towns to work in industry. Gordon points
out that in this process teenage girls of farm families were an important source of labour. At the end
of the Meiji period, out fr 8,00,000 factory workers, 4,75,000 were employed in textile mills and 4/5
were women workers, as they were cheaper to employ than men.

3. Thirdly as Japan’s population grew from 35 million to 45 million between 1880 and early 1900s, it was
the agrarian sector which supported this growth, with a 1-3% increase in productivity due to
addition of new crops, seeds and fertilizer. This helped conserve valuable foreign exchange till 1920s
as Japan met its domestic food needs.

Further, Irving I. Kramer says that the conversion of daimyo and samurai to pensioners was another vital link between
industry and agriculture. The daimyo and samurai accumulated wealth from pensions the government paid them and
invested that into industry. The government first developed industry and later sold it to privateers. Initially it sold non-
military industries. Thus the government aided in this shift from agriculture to industry, thereby, creating businessmen and
financiers.

The agrarian sector also earned large amounts of foreign exchange by exporting silk, tea, and cotton products. W.G.
Beasley states that there was growing demand for Japanese silk, especially in USA as well as in Europe (which was hit by
silk blight in 1868) in the 1870/80s. Silk accounted for 30% of exports in 1880 and continued as a main item of export till
the 1930s. Andrew Gordon holds that silk accounted for 42% of Japanese revenue from exports. Tea accounted for 26% of
exports in 1880 but was down to a mere 3% in 1910. Cotton exports were negligible in 1880 by 1910 they accounted for
14% of exports. Andrew Gordon points out that the third highest source of foreign exchange, came from foreign
exchange that emigrant labour sent back home to their families, from Hawaii, California or Latin America.

Therefore, it can be said that the agrarian reforms introduced by the Meijis changed a feudal economy into a modern
capitalist economy in a very short span. The government played a major role in aiding this change, as it introduced
reforms such as the establishment of agricultural colleges e.g. at Saporro (1875), experimental farms, a national
agricultural society (1881), and provided seeds and fertilizers to help small farmer families increase production. Though
the area of arable land only increased by 13% between 1880 and 1900, the yield per hectare rose by 30% according to W.G.
Beasley. Capital for industrialization was raised without major consolidation of land holdings as in Europe.

Thus, changes in the agrarian settlement were intrinsically linked to industrialization, raising the initial capital for this and
finally to achieving the ultimate Meiji aim of building a, “rich country, strong army” or fukoku kyohei.

INDUSTRIAL GROWTH-

Various historians such as W.G. Beasley and T.C. Smith state that in the late Tokugawa period certain attributes
necessary for economic growth emerged. These were-a money economy, a good distribution system covering both rural
and urban areas, some expertise in finance, knowledge of Western science among the ruling class and small capital
accumulation amongst leading families such as Ono and Mitsui as well as commoners. W.G. Beasly says that the ‘unequal
treaties’, spurred the Meiji industrialization as they forced Japan into the world economy, exposed it to new technology
and stimulated centralization and economic growth to defend Japan against the threat of colonialism. The
Industrialization of Japan has been divided into two broad phases by Beasley- (i) Phase I: 1860-1885 and (ii) Phase II:
1885-1930.

Phase I:

The Meiji government started the industrialization process by concentrating on, what E.H. Norman refers to as,
‘strategic industries’. Thus the government began by developing three main sectors- (i) Communication and Transport,
(ii) Defence and (iii) Mining, while instituting aforementioned agrarian reforms simultaneously.

(i) In the sphere of Communication and Transport, the government established a postal service with 3000 offices within
three years. It established telegraph lines in 1869, laying the first line between Tokyo and Osaka, and hiring English
technicians. The telegraph was purely government owned for security reasons, which benefitted them in war time. The
Railways sector was initially entirely government owned, though by the end of the century 2/3rds of it was privatized.
The first line connected Tokyo and Yokohama by 1872. Railways were a strategic industry as it connected Tokyo, Osaka
and Kyoto and deep water ports of Kobe( 1877)and Yokohama, which was important for defence and trade. Andrew
Gordon says railways impacted society as it radically altered their notion of time, distance and social behaviour.

Shipping services were also developed with the government controlling internal and overseas trade. In 1873 Iwasaki Yataro
founded a leading shipping firm-Mitsubishi, with a few ships acquired from the dissolution of his domain Tosa, he later
added government subsidised military transports to his fleet operating this as far as Vladivostok. In 1885 the government
forced him to merge his firm with a shipping rival the NYK (Nippon Yusen Kaisha), and granted them 8% dividends for
15 years. Mitsubishi was to be one of the most influential industrial houses of Japan`, initially aided by government
contracts and subsidies, it would later be part of the ‘Zaibatsu’.

(ii) In the Defence sector Hugh Borton points out that the government confiscated former Tokugawa military industries
and nationalized them. In 1868 it took over the Nagasaki shipyard and foundry which it sold to Mitsubishi in phase II.
The Yosuka shipyard and foundry, was retained till 1945. The government also inherited arsenals, one at Osaka, where it
employed foreigners, and built up weapons.

(iii) In the Mining sector, important for growth of heavy industries and railways, the government took over the Takashima
coal mine, which was developed earlier by B. Glover and Co. In this sector it allowed greater privatization and employed
many European miners, geologists and engineers. Other mines that were important were Ikuno silver mine (1868), Sado
gold mine (1869) and the Kozaka silver mine (1869). Hugh Borton points out that the government set up the Ministry of
Industry in 1870, under which industrial school were set up and subsidies and finance arranged.

The government also developed cotton textile, silk and the tea industries. These industries were very important as these
commodities earned good foreign exchange later coal was also added to this list. W.G. Beasley says that tariff regulation
by foreign powers, left Japan with no choice but to mechanize and improve the quality of its silk and tea. Thus
regulations regarding silk reeling were introduced (1873) the government financed silk filatures at Marbashi and Tamioka
to introduce Japanese entrepreneurs to western manufacturing methods. Students were sent abroad to study sericulture in
Europe. The benefits of this paid off as raw silk production increased by 60% and exports by 100% between 1868 and
1883. Beasley also points out that the government set up machine manufacture to reduce its dependence on foreign import
of machinery. Thus a machine factory was established in 1871, steam powered factories to produce cement in 1875, glass
in1876 and white brick factory in 1878.

Important banking reforms were introduced, since a financial crisis hit Japan in 1881, due to high government
expenditure incurred in order to suppress the Satsuma rebellion (1877). Bonds had to be issued in lieu of samurai pensions
(1876) all of which resulted in high inflation. Thus Finance minister Matsukata Masayoshi initiated the Matsukata Reforms
to deal with this situation. He cut back government expenditure, introduced new taxes on cigarettes and sake, thus
achieving a budget surplus which he used to stabilize the currency. He also set up centralized fiscal control, as the Bank
Of Japan (1877) was meant to regulate banking and national currency. He reorganized the Yokohama Specie Bank to
control foreign exchange and introduced post office saving schemes. These reforms resulted in a major deflation, causing
bankruptcies and a large amount of rural distress, however they left Japan with a strong industrial base for future
industrial growth.

Phase II-

The second phase of industrial growth began in 1885 and was associated with privatization of some industries, the
establishment of new ones and the rise of the ‘Zaibatsu’ (a large Japanese business conglomerate). W.G. Beasley points
out that this phase saw investment of private capital in the domestic textile industry. This far the textile industry had required
a small initial investment; it could be carried out in small workshops and used Japanese farm labour and simple technology.
Increasing demand for silk exports, especially in U.S.A., led entrepreneurs to mechanize. He says in 1893 there were
only 3200 reeling factories which usually employed 10 people, yet by 1929 mechanization led to increased production by
few filatures. Beasley says the cotton industry was also privatized now as the Osaka Cotton Spinning Company was
established in 1882 by Shibusawa Ei’ichi, who introduced Western technology. As he was able to pay 18% dividend others
followed his path and between 1886 and 1890 the yarn output in cotton increased seven fold. Beasley says this led to a
temporary over production crisis but soon things stabilised as 1895 victory of Japan over China in the Sino-Japanese war led
to China and Korea opening up as new markets.

The period post 1900 saw the development of the heavy industries sector. Beasley says between 1910-14 volume of
output of the following industries increased- metal and machinery, chemical and ceramic ,and electricity and gas . In
this period the Yawata Iron and Steel Works were set up in 1901. By 1914 the output of iron and steel could meet half and
one third of the requirement of local industry respectively.

There was also an increase in coal and metal mining, with mineral output increasing by 700% between 1876 and 1896.
The coal fields of Kyushu and Hokkaido were important in this period as they provided fuel to heavy industry. Mitsui
emerged with major mining interest and mines raised output from 1million ton in 1885 to 21 million in 1914 and 34
million by 1929. Increase in industrial production led Japan to import coal. The railways now largely privatized,
continued to grow, and covered 1000 miles by the 1880s, lowering transport costs of raw material. The ‘Big Five’ or five
major companies Nippon, Sanyo, Kyushu, Kansai and Hokkaido now controlled rail expansion.

This period also witnessed the emergence of the Zaibatsu .The ‘zaibatsu’ comprised large family enterprises that
monopolized industrial sectors, with government help. These were merchant families such as Mitsubishi and
Sumitomo, from the pre-Meiji period who extended credit to the Tokugawas and later shifted allegiance to the Meiji . All
these companies had diverse interests in banking, shipbuilding etc. These companies exploited the role of the government in
the industrial sector, and got large concessions from the government when it sold off enterprises in 1882. For example, Ito
Hirobumi allowed Mitsui to mine from state owned Miike mine at a cost price and sell coal for a profit. Mitsui profited
from this as it sold coal to foreign steamer and thus established links with foreigners as far as London. Mitsui also founded a
cotton firm, paper pulp factory and engineering concern, thus diversifying.

The Zaibatsu survived industrialization well as they brought in professional management, just controlling finances
themselves. Alexander Gerschenkron says that the relative lateness of Japanese industrialization and the pressure to
catch up with the west led to the rise of the Zaibatsu. Andrew Gordon says they rose due to many factors such as
government’s support of these firms, inexpensive labour in the 19th century, and due to the entrepreneurial atmosphere.

The industrialization of Japan had a profound impact on society not only did it lead to the emergence of industrial
magnates, but also the emergence of a working class. Andrew Gordon points out that women workers comprised 4/5th of
workers in the textile industry, faced great hardship, being young and from rural backgrounds, they were paid half the
wages of male workers, exposed to poor work conditions and sexual harassment. Male workers worked in the heavy
industries. By the 1890s they formed unions to protest their poor working conditions and were often job hopping.

The State amidst all this, tried to create worker pride, for building kukoku kyohei –or a “strong army rich country”. Thus
in conclusion, the industrialization of Japan was initially sparked off by the government and was dependent on the agrarian
sector, but by 1900s, private industry injected much dynamism, and helped create a secure industrialized nation that
rivalled the great Western world power by the World Wars.