Japan also continued to make impressive progress in economic
development. Spurred by rising domestic demand
as well as a continued high rate of government investment
in the economy, the production of raw materials
tripled between 1900 and 1930, and industrial production
increased more than twelvefold. Much of the increase
went into the export market, and Western manufacturers
began to complain about the rising competition
for markets from the Japanese.
As often happens, rapid industrialization was accompanied
by some hardship and rising social tensions. A
characteristic of the Meiji model was the concentration
of various manufacturing processes within a single enterprise,
the so-called zaibatsu, or financial clique. Some of
these firms were existing merchant companies that had
the capital and the foresight to move into new areas of
opportunity. Others were formed by enterprising samurai,
who used their status and experience in management to
good account in a new environment. Whatever their origins,
these firms gradually developed, often with official
encouragement, into large conglomerates that controlled
a major segment of the Japanese industrial sector. According
to one source, by 1937, the four largest zaibatsu
(Mitsui, Mitsubishi, Sumitomo, and Yasuda) controlled
21 percent of the banking industry, 26 percent of mining,
35 percent of shipbuilding, 38 percent of commercial
shipping, and more than 60 percent of paper manufacturing
and insurance.
This concentration of power and wealth in the hands
of a few major industrial combines resulted in the emergence
of a form of dual economy: on the one hand, a modern
industry characterized by up-to-date methods and
massive government subsidies and, on the other, a traditional
manufacturing sector characterized by conservative
methods and small-scale production techniques.
Concentration of wealth also led to growing economic
inequalities. As we have seen, economic growth had been
achieved at the expense of the peasants, many of whom
fled to the cities to escape rural poverty. That labor surplus
benefited the industrial sector, but the urban proletariat
was still poorly paid and ill-housed. Rampant
inflation in the price of rice led to food riots shortly after
World War I. A rapid increase in population (the total
population of the Japanese islands increased from an estimated
43 million in 1900 to 73 million in 1940) led to
food shortages and the threat of rising unemployment. Intense
competition and the global recession in the early
1920s led to a greater concentration of industry and a
perceptible rise in urban radicalism, marked by the appearance
of a Marxist labor movement. In the meantime,
those left on the farm continued to suffer. As late as the
beginning of World War II, an estimated half of all Japanese
farmers were tenants.
World History
