2022 年 39 巻 p. 1-4
The articles in this special issue focus on the relationship between Japan’s colonial enterprises and capital markets. This topic was chosen for the following reason. Namely, it was the supply of capital from Japan that leveraged the incorporation of Japan’s colonies into the imperial economic zone. As such, the supply of capital to the colonies has become an important topic of analysis in the context of research on the history of Japanese imperialism (Kaneko 1985, 1987). At the same time, when it comes to research on the economic history of Japan’s colonies, while the colonies have come to be seen as a source of food and resources that were provided in response to the supply of capital from Japan, many aspects of how exactly that capital was supplied remain unclear. The articles in this special issue attempt to clarify the mechanisms by which the colonies were supplied with capital by detailing the processes through the enterprises active in Japan’s colonies procured financing. The findings presented in these articles will raise the standard for research on the history of economics and business in Japan’s colonies—a field where the analysis of financial matters has been scant—and also contribute to the study of Japanese economic and business history more generally, where there is a dearth of work analyzing the capital markets when it comes to overseas investments. The Japanese colonies that are the focus of the articles in this issue comprised a sphere of influence that included Kwantung Leased Territory, the lands attached to the South Manchurian Railway, and puppet state of Manchūkuo.
One of the economic characteristics of Japan’s colonies is that their economic growth was highly dependent on trade with Japan (Hori 2009). To see how this dependence operated in practice, let’s look at the main trade items from Taiwan, Korea, and Kwantung. The main items shipped to Japan from Taiwan were raw sugar and rice. From Korea, it was rice. And from Kwantung, it was Manchurian-grown soy beans, soybean cake, and soybean oil. In return, while the items shipped back to these territories from Japan were varied, the main return exports from Japan were cotton goods (cotton yarn and cotton cloth). The structure of trade within Japan’s imperial economic zone as established between the mid-1900s and the mid-1910s reflected the respective industrial structures of Japan and each of its colonies. While each of the colonies was grounded in one or another primary industry such as agriculture, in Japan it was the secondary industries such as manufacturing that were becoming of greater importance. The division of labor within the empire—wherein agricultural and processed agricultural products from each colony were exchanged for light industrial products from Japan—manifested itself in the foregoing trade structure. Agriculture in Japan’s colonies grew steadily during the 1920s. With the 1930s, the composition of the exports from Japan changed. While the volume of trade between Japan and the colonies had grown, and the role of products from light industries as exemplified by cotton products had decreased, the importance of products from heavy industries such as machinery, transportation equipment, and steel had grown (Kaneko 1987). These changes have become the focus of theories about intra-Asian trade that stress the high rate of growth in trade within the Asian region (Sugihara 1996), and about the history of East Asian capitalism, where the emphasis has been on the swelling of the economic bloc within the Japanese empire (Hori 2009, 2016).
One should note that it was this supply of capital from Japan to its colonies that lay behind that structure of trade. For example, implementation of the Plans for Increasing Rice Production in Korea to boost rice exports to Japan called for getting funds to the irrigation association to achieve that increase. This in turn was premised by financing from the Oriental Development Company and the Chosen Industrial Bank (Chōsen Shokusan Ginkō, hereafter, CIB) that was procured by issuing bonds on Japan’s capital markets. Furthermore, both the quantitative increase in trade between Japan and its colonies beginning in the 1930s and the increased importance of the export and transfer of heavy and chemical industry products from Japan are attributable to the increase in Japan’s investments in the colonies during that era, as symbolized by the investments in Manchuria. The aforementioned trade structure that Japan and its colonies had created was backgrounded by the supply of capital from Japan to those colonies. Furthermore, financing from Japan played a major role in the capital formation that was indispensable to the economic growth of those colonies.
Mizoguchi and Yamamoto (1984) provide quantitative estimates on capital formation in Korea and Taiwan during the years when they were Japanese colonies. Meanwhile, Yamamoto (1992) offers estimates on long-term capital exports to those two colonies in six categories: government bonds, local bonds, corporate bonds, loans, stocks, and project capital investments. In addition to this flow data, Kaneko (1993) also used stock data from Manchuria to compare estimates on the amount of investments that went from Japan to the colonies. He found that the most went to Manchuria, followed in order by Korea and then Taiwan. Furthermore, he also points out that the periods of significant growth for each colony differed, with Taiwan experiencing its peak from the late 1910s to the early 1920s, Korea going through it from the early 1920s to the early 1930s, and Manchuria experiencing it in the early 1930s.
In contrast to these macroeconomic estimates, the articles in this special issue focus on micro-level empirical analyses. There were multiple channels of investment into the colonies. These could be broadly categorized as: (1) treasury investments, such as government bonds and loans; (2) investments by companies with a head office in a colony; (3) investments by companies with a branch or business office in a colony; and (4) personal investments. Investments in categories (2) and (3) can be further sorted out into stocks, reserve funds, bonds, loans, and the like (Kaneko 1986). The articles here focus mainly on the stocks and bonds from category (2). The three articles share in common their interest in analyzing the behavior of the companies demanding capital in the colonies and of the financial institutions and individual investors that supplied that capital. The articles also have a shared focus on capital markets with particular respect to how that capital actually flowed from Japan to the colonies.
The colonial enterprises that are the specific objects of analysis in this special issue are the South Manchuria Railway (hereafter, SMR), the CIB, and Taiwan Electric Power (hereafter, TEP). As Kaneko (2022) has stressed, semi-private companies played an important role in Japanese investment in the colonies. SMR and TEP were special semi-private companies responsible for procuring financing from the capital markets while building infrastructure in Manchuria and Taiwan, respectively. The CIB was likewise a special semi-private financial institution that supported Japanese business in Korea. It provided agricultural financing based on funds procured from the issuing of bonds on Japan’s capital markets for the purpose of implementing the aforementioned Plans for Increasing Rice Production in Korea. In short, the three companies that are discussed in this issue were special semi-private companies that procured financing from the capital markets as they fulfilled their respective roles in the development of the colonies of Manchuria, Korea, and Taiwan. When it comes to business history research on colonial special semi-private companies that focuses on their relationship with capital markets, there is one case study on Taiwan Development Corp. (Minato, Saitō, and Yagashiro 2021). However, the primary focus of that work’s analysis is the war years. The primary focus of the analyses of the three enterprises taken up in this issue is on the interwar period. The three articles discuss those enterprises in relation to the development of the Japanese capital market during those years.
The Hirayama article examines the process by which the number of SMR shareholders increased, which involved a reliance on certain unique features of prewar Japanese stock markets, combined with the mix of a poor flow of actual stock certificates and large numbers of off-floor transactions. These features created risks in the forms of unscrupulous securities brokers and legal deficiencies. These made it difficult for local investors to obtain SMR shares. Conditions clearly changed in 1933 when capitalization was increased by ¥360 million. This made it possible for local investors to obtain the SMR shares that been shunned by existing investors.
The Minato article discusses the many difficulties that TEP faced in procuring the financing from the capital markets that was needed for developing sources of electric power in the years following the postwar economic panic of 1920. There was a lack of incentives to invest in developing electric power in Taiwan owing to the limitedness of its power market. The fact that financial institution and individual investors were willing to provide capital despite this lack of investment incentives was premised by the facts that not only was capital-seeking TEP highly profitable, but also that it had a sound investment funds redemption plan.
The Yajima article uses the CIB, which was one of the main conduits for investments in Korea, as a case study to examine competition and cooperation among securities brokers. The underwriting of CIB bonds, which were continually issued in large sums, clearly laid a foundation for growth for securities companies, who were increasing their presence on the bond markets. Moreover, an examination of into the holdings of CIB bonds by Japanese financial institutions reveals the source of the capital that was being invested in Korea.
Japan’s capital markets had a risky aspect to them during World War I, but by the 1930s they began to play a role in concentrating the capital that was dispersed throughout society (Shimura 1969). Combined, the three articles in this special issue show that securities issued by semi-private special companies in each of the colonies were an important factor in the quantitative expansion and qualitative growth to Japan’s capital markets during the interwar period. They also show that large amounts of capital were supplied from Japan to the colonies through the underwriting activities of securities companies and off-floor traders. Throughout this process, the providers of that capital were faced not only with a lack of incentives for investing in the colonies, but also such risks specific to the Japanese capital market as unscrupulous securities brokers and legal deficiencies. Initially, there were individuals and financial institutions who were not averse to those risks. Subsequently, policy measures were pursued that were able to mitigate those risks, as did the qualitative development of Japan’s capital markets. This led to a quantitative expansion in the size of those markets and investment in the colonies. In short, in clarifying the process by which colonial enterprises by procuring financing from Japan’s capital markets, these three articles imply that Japan’s colonies were one factor that its capital markets could not ignore in the years before World War II. They further suggest that the development of Japan’s capital markets in the interwar period had a significant impact on the colonial economies.