Japan & State Impulse: Part 2

15.08.2017

Part 1.

The Development of the Shipping Industry

Special attention is deserved by the shipping industry in Japan due to the boycotts that the country suffered on behalf of Western powers tending to hinder it from developing its own shipping industry.

Western powers were also aware – and they thus agreed amongst themselves- that the achievement of potential, in terms of power, of the Nippon State would alter the correlation of forces on a regional level to their detriment. As a logical consequence, the objective of Western powers with respects to Japan consisted of trying to guarantee that its political, military and economic development not affect their local and regional interests. The Western powers failed completely in the attainment of that objective.

The Meiji government quickly realized that the charters they paid English or American shipping companies would make the importation of machinery 120 percent more expensive and that foreign ships were monopolizing Japanese coastal navigation in its entirety. It therefore decreed a law that, inspired by the old British Navigation Law of 1651, promoted naval construction.

For the development of the shipping industry, Japan needed to purchase construction blueprints abroad and obtain engineers and technicians willing to move to its territory in order to transmit their knowledge. The committees sent by the Japanese government to England and the United States to acquire blueprints and attract engineers often encountered closed doors. Finally Japan, after arduous arrangements, was able to get England to sell them an extremely expensive shipping construction plan. Nevertheless, in 1870 – when in the state shipyards of Uraga the construction of the first ships was completed - it was revealed that the English blueprints knowingly contained false measurements. Japan had simply been “swindled”. When the first ship was launched, it killed fifteen citizens and it heavily heeled over to port. In the blueprints, the British engineers had distributed the weight so subtly and in such an irregular way that all subsequent attempts to launch other ships failed systematically. The rulers of the Meiji government realized that they had been scammed by the British. They swallowed their indignation and accepted having to purchase the older and more obsolete ships from Europe and the United States but did not abandon the idea of creating a national shipping industry and they began, then, from the beginning, training up the necessary technicians and engineers. In 1894 Japan had already gone from single-mast junk construction to the construction of steam boats. [7]

After the invasion of Formosa Yotaro Iwasaki, descendant of a warrior family, received free of charge all the ships that made up the new fleet of the Japanese State and the government also granted 250,000 Yen of annual subsidies for the construction of new ships. Later another 15,000 annual Yen were granted to found a nautical school destined to slowly and markedly replace foreign captains and helmsmen. Iwasaki thus initiated the construction of modern shipyards but, in order to not have the same unpleasant experience as had the State builders, he had the construction blueprints stolen. In this way he double the tonnage in one year.

In 1911 the Japanese government – drawing on American laws of 1789 to promote the shipping industry - banned foreign countries from coastal sailing. The Mitsubishi then founded, jointly with the Mitsui and the Ocurra, the Osaka Shosen Kaisha and later the Kogusai Kisen Kaisha, that allowed Japan to not only achieve the navigation of its own coasts but also to create navigation routes to Africa, Australia, the United States, Europe and South America. Fifty years after the Meiji government decided to create, through state impulse, the shipping industry, the Japanese merchant marina had 4,000,000 tons available. Its capacity had multiplied one-hundred fold.

The First State Loans

In 1870, the Meiji government obtained its first foreign loan in the sum of one million sterling pounds. English banking granted the loan for nine years and demanded of Japan an annual interest of 9 percent, when it was common to charge non-European countries 4 percent. With the loan money they purchased in England – in the city of Lancashire - two spinning machines with two-thousand spindles each and, what’s more, they installed two state cement factories and one glass factory, equipped with American machinery. State shipyards were also created, a gas company, an electric company and a canning company. 
In 1873, after lengthy negotiations, the Japanese government obtained, in the financing city of London, under truly usurious conditions, a new credit in the sum of 2,500,000 pounds. With the loans, the government was able to technical frame for reforms. It inaugurated the first stretch of railroad from Tokyo to Yokohama and it funded the establishment of the Genroin: a planning commission in charge of sending study committees abroad in search of the best possible model to industrialize the country and to build a modern State. Japan would not leave anything to the solutions of chance, would not leave any important sector of the freed economy in the “magical hands of the market”. From the Meiji Revolution on, it would act in a planned way.

The Planning of Economic & Political Life

In search of a model that would allow them to reach the new threshold of power as quickly as possible, the Japanese government sent many study missions abroad as much to Europe as to the United States. Nevertheless, in Japan’s eyes, the United States did not appear to be the strongest and most advanced country. For this reason, it was the European countries that mainly served as a model for the “selective modernization” of the most important sectors of economic and political life.[8]

It is necessary to clarify that, in that moment in history, Japan was on the verge of falling under the ideological-cultural subordination to the hegemonic structures of world power, given that some of the politicians and intellectuals proposed the abandonment of all that was Japanese since they considered that all that was the past, all that was Japanese, was “outdated” and “barbaric”. That sector of Japanese thought and policy even came to propose the renouncement of the use of the Japanese language and the genetic renewal of the Japanese race through inbreeding with the “superior” white race. Logically, the ideological program of that sector of Japanese thought included the acceptance of economic liberalism and the international division of labor.

In reaction to the ideas held by this group of ideologically and culturally subordinated Japanese intellectuals to the hegemonic structures of world power, the proposal was bolstered to combine “selective imitation” of the West with the recreation of a “neo-traditionalism” that would maintain the values of the national culture current. All the study committees reconfirmed the idea that Japan would only be able to free itself of foreign subordination through the execution of an accelerated process of industrialization and that that process could only be carried out, directly, by the State. The Japanese government worked in a targeted manner. The State created and managed all the first big industries. Until 1884 in Japan there only existed one entity that carried performed feasibility studies, built factories, bought machinery and managed the created businesses: the State. This was because the study committees had come to the conclusion that only through state impulse could the country industrialize rapidly. Nevertheless, it was very clear to the government that the State should not remain as a businessman forever. It was also clear, from the beginning, that when State technicians were able to created successors, when the schools could assure the coming of a new generation of engineers and managers – that would allow them to dispense of foreign assessors -, the State would abandon the management of industrial companies even though, of course, it would not abdicate from the exercise of the management of the country’s economy.

In 1884, after having created an amazing industrial park, the Japanese State decided to hand over the majority of the state companies to individuals. The process of property transfer began with the textile industry; four years later, in 1888, the government broke away from the ownership of the copper mines, later the cement factories, glass factories and other. It ceded the companies it had created at a price so low that it was practically equivalent to a gift. When the State retired from the management of the large enterprises it had created, these went on to be managed by the families of those who had collaborated with the government in the reconstruction of national power. Hence, the Mitsui, the Mitsubishi, the Satsuma, the Okura, the Furukawa, the Kuhari and the Asano became the great industrial entities. The monopolies of the State became, in the most natural way, the monopolies of the great families. In this way, through state impulse, Japan was able to create a “solid core” for its national bourgeoisie, the very same one that, apart from properties and companies, received the trained personnel to operate them and the official protection against external competition. Furthermore, the State was the main client of many of those companies, so the purchase of the bulk of their production was guaranteed. From then on the great conglomerates of industrial companies formed due to the privatization of State companies was known as “zaibatsu” – a word that means a well-off family of great fortune, - linked to a large family that gave it their name.

From then on, the national Japanese bourgeoisie, that owed everything to the State, was always willing to listen with attention to the opinion of the government and to follow the orientations that it set in economic and developmental matters. The objectives of this national bourgeoisie were always in correspondence with the interest of Japan. Furthermore, the State, in order to correct the unruly and assure itself that the businesspeople always acted while thinking of national interest, possessed an effective tool that acted as a corrector: if the interest of the companies did not correspond with the interest of the nation, the names of those companies were erased from the provider relations list of the State.

The function of the large companies as a team selected to represent Japan in the consecution of the national objective of building a strong country, capable of competing with the West, meant that they should be more aware of that national objective than everyone else, have in mind the criterion of administration and support the government under any circumstances. With this well understood, from the Meiji Revolution on and during some fifty years Japan fought as a unified country to build a modern state. (Morishima, 1997: 156)

In 1930 the army, to complement industrial development, built an important industrial complex and later repeated the methodology applied by the Meiji Revolution to transfer those companies to private owners. Thus, thanks to a new state impulse, “companies like Nissan, Nihon Chiso (Japan Nitrogen), Nihon Soda (Japan Soda), Showa Denko (Showa Electrical)” prospered under military protection (Morishima, 197: 125). Nevertheless, this second industrialization process, directed this time by the Army, would take Japan to catastrophe. With military owners of power, Japan went down the road to disaster. The militarism that, slowly but surely, took over the Nippon policy, by leading the country into a war it was not in shape to win, destroyed the work of the Meiji Revolution.

Footnotes:

7. It was the engineer Emile Maidzuu who organized the shipyards of Yokohama, Sasebo, Maidzuu and Muroran. The first Japanese ironclad cruiser of 4,300 tons was launched in 1891” (Brossard, 2005: 515).

8. In each country the study committees that were sent out analyzed the organization of the post office and the police, and even the organization of industry and finances. The gathered information by the Japanese agents was astounding and though some returned ideologically colonized, the majority managed to make a critical analysis of all that they had heard, observed and studied. With the information collected by the committees, the Meiji government decided on the model to be followed in each area. The imitation of the West was selective and reflexive. The educational system was inspired by the French model of school districts. However, as far as University teaching went, the American style was followed in part. The army also followed the French style but the imperial navy preferred to adopt the model of the Royal Navy. The constitution followed the German model. The railways and telegraph, the British model.

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