Pre-WW2 Japan's Economic Policies

by Kyle Catarata

What makes Japan especially unique, when considering the economic history of the country, would be their implementations of policies. Analyzing Japan’s Economic Miracle after World War II cannot be done without first considering the country’s background in economic policies. It is not just the morale of the citizens nor assistance from other countries that drives Japan’s economy forward, rather it is through policies, enacted and enforced by the government, followed by their citizens, that initiates this type of growth.

Sakoku
Sakoku, which translates to “closed country”, was a foreign policy that was enacted by the Tokugawa Shogunate during the Edo Period (1603-1868). The reasoning for such seclusion was because Tokugawa Ieyasu feared of Western and religious colonization by Christians in Europe (Yasuka, 2014). Though trade would have amounted to more economic growth and knowledge in technological advancements, the shogunate believed impeding forces would shift the current state of Japan. Ergo, the Tokugawa Shogunate decided to close the country to any foreign trade and prohibit any way of leaving. Both those who sought to leave, and those who left and later returned, were eventually executed. Albeit there was no way of trading with any foreign country, there were exceptions such as with the Dutch East India Trading Company and China. 

Although the seclusion of Japan resulted in a loss of trade and understanding with other nations, many historians debated whether the policy, enacted by the Tokugawa Shogunate, held any positive effects on the economy. After the founding of the Tokugawa dynasty, the Japanese population rose from 20 million to 30 million and remained steady at 30 million until the Meiji Restoration. Due to famine and “human misery” that fell under the weight of large families, many Japanese families tried limiting their size to accumulate per capital wealth. The only economic growth that occurred during this time derived mostly from rice taxes and that from the samurai class, whose taxable output contributed to the economy. 

However, by the early 19th century, “rice taxes, head taxes on city dwellers, and franchised monopolies were becoming less effective at maintaining the samurai’s share of Japan’s rising national income” (Flath, 2014). With repeated, unsuccessful, attempts to enlarge the collection of rice taxes to compensate for multiple incomes, the period’s faced an inevitable economic demise. With foreign intrusion, the United States of America initiated the start of a new era. 

Meiji Restoration 
The Meiji Restoration was a period after the fall of the Edo Period in 1868. During this period, the U.S. sent Commodore Matthew C. Perry to demand Japan to reopen in 1853, which they eventually did. It was also the time where the feudal state of Japan fell, hence the Tokugawa lost his power, making the emperor, Meiji the Great, head of state. With this, the nation moved toward a focus of industrialization, similar to that of the West. 

With the abolition of the feudal system, the people of Japan were free to choose their intended occupation without worrying about the former social hierarchy. This new environment allowed Japan to invest heavily in new industries and technologies to grow the economy (The Meiji Restoration). 

Such long-term investments included new railroads to connect the four major islands, shipping lines, telegraph and telephone systems. At first, most industries that were funded by the government were owned solely by the government. However, after a few years, most of these industries were owned by private businesses to initiate a capitalistic economy(Economic Change). The Meiji period was a fundamental milestone in Japan’s historical growth as it was the outcome of a 200 year long feudal economy as well as a trampoline to jumpstart the economy thereafter, especially in the Taishō (prewar) and post war period. 

A main economic shift during the Meiji Restoration involved the land tax reform. Prior to the restoration, most of the revenue for the bakufu and the han governments came from rice taxes. However, in 1873 the government replaced the rice taxes with a monetary land tax. By doing so, the government allowed for private ownership of agriculture land, which in turn improved economic incentives to allocate land efficiently for the use of agriculture. 

The Meiji Restoration was not only a period to restore the mistakes carried on from past periods, but an era of improvement, advancement, and reform that, in turn, helped the national economy as a whole in long-term growth. It was essentially the period where Japan showed the rest of the world that they were on the same playing field as those in the West, seeing how fast they caught up to Western industrialization. 

Over the span of several centuries, Japan  witnessed its fair share of political and economic change. Through the seclusion policy, which closed the country off for well over 200 years, to the Meiji Restoration, whose quasi-policy included industrial advancement, reform, and economic prosperity, the implementation of policies were key to Japan’s economic growth and success that held a precedent in later policies implemented thereafter. 


Work Cited: 
“Economic Change.” Meiji Period, jordanahjilljessiesarah.weebly.com/economic-change.html.
Flath, David. The Japanese Economy. Oxford University Press, 2014.
Hays, Jeffrey. “TOKUGAWA IEYASU AND THE TOKUGAWA SHOGUNATE.” Facts and Details, Sept. 2016, factsanddetails.com/japan/cat16/sub107/item506.html.
“The Meiji Restoration and Modernization: Asia for Educators: Columbia University.” The Meiji Restoration and Modernization | Asia for Educators | Columbia University, afe.easia.columbia.edu/special/japan_1750_meiji.htm.
Yasuka. “The Sakoku Years of Japan.” KCP International, 16 Oct. 2014, www.kcpinternational.com/2014/10/the-sakoku-years-of-japan/.