2023 Volume 40 Pages 6-23
This study examines the locomotive supply system that supported the rapid development of Japan’s railway industry at the turn of the 20th century, focusing on technological independence of Japanese mechanical engineers and the export of American-made locomotives to Japan. It demonstrates how American locomotive manufacturers dismantled the British monopoly and penetrated the Japanese market, by paying attention to changes in technological development and business system on the demand side of the railway industry and to roles of international trading companies that mediated the supply of locomotives and rolling stock. In particular, a case study of Frazar & Co., an agency of Baldwin Locomotive Works, is implemented, which investigates cooperation between trading companies and manufacturers in the locomotive industry with regard to marketing activities. Trading companies, such as Frazar & Co., introduced locomotive manufacturers to engineers of railway companies, government officers, and academics in Japan, China, and elsewhere. In emerging markets, research and transaction costs borne by manufacturers and customers were very expensive. Trading companies in emerging countries such as Japan and China had information about the emerging markets and contributed to increasing overall profits by lowering these costs.
The purpose of this article is to investigate the supply mechanism and dynamism of railway supplies and materials, especially steam locomotives, that made possible the rapid development of Japan’s railway industry in the transition period from the 19th to the 20th century. In doing so, it reexamines the international backgrounds of the development of Japanese railways.
Geoffrey Jones, who elucidated the history of multinational enterprises from a long-term perspective, has termed the integration of the world economy that occurred on an unprecedented scale in the late 19th century the first global economy.2 In particular, the integration of the product market proceeded with alacrity because of the arrival of the transport revolution during the transition period from the 19th to the 20th century, intensifying export competition among advanced Western countries. In the prospect of the growing world locomotive market, American and German locomotive makers sought to keep pace with their British rivals, which had pioneered locomotive exports, bringing about a relentless struggle for market share throughout the world. Their main markets were Europe and South America during the 1880s and the early 1890s. They shifted to East Asia in the late 1890s, and then to British and French colonies in the 1900s. What should be emphasized in relation to these shifts is that the importance of the East Asian market, especially that of the Japanese market, grew from the 1890s onward.
The intensification of international competition over the Japanese market forced railway companies, that is, prospective customers for locomotives, to reduce costs and delivery time for material procurement and to broaden the scope of technological choices. In that sense, it can be presumed that there existed in the background of the rapid development of Japanese railways an international environment in which a material procurement system was established that made possible a stable supply of railway materials at moderate costs. The building of railways in an island country such as Japan was considered to be a domestic venture. However, the issue of railway development within a country cannot be discussed without studying the background of globalization during that era. Therefore, this study clarifies various international factors related to the establishment of Japan’s railway industry by focusing on steam locomotives, one of the most impactful inventions of the 19th century and the most advanced machines around the turn of the century.
In addition, it is also necessary to pay attention to roles of trading companies that mediated the import and export of locomotives. We have to consider why trading companies were needed by both users (railway companies) and makers (locomotive manufacturers) in emerging markets such as East Asia in the early 20th century.
Research on steam locomotives in Japan has been carried out in various disciplines. In the field of economic history, Sawai Minoru has provided a comprehensive description of the formation and development of Japan’s railcar manufacturing industry.3 Sawai’s research is focused on the establishment process of the railcar manufacturing industry as one example of the building-type machine industry. However, the main focus of this study is laid on the supply of locomotives, which were essential to the railway industry’s reproduction process. For this reason, the turn-of-the-century period (the 1890s and 1900s), that is, the main focus of this research, is treated only as pre-history in Sawai’s seminal work on the history of railcar manufacturing.
On the other hand, one of the best researches on steam locomotives in the US is the case study of Baldwin Locomotive Works conducted by John Brown.4 Steven J. Ericson has examined American locomotive manufacturers’ marketing activities in Japan and competition among British, American, and German locomotive manufacturers in the Japanese market on the basis of the diary of Willard C. Tyler, a travel agent of American Locomotive Company (ALCO).5 This is an important research on marketing activities conducted by American locomotive makers around the turn of the century.
In addition, a substantial amount of research has been accumulated on importation activities carried out by Japanese and international trading companies around the turn of the century. One example of such research on international trading companies is Ishii Kanji’s study of Jardine Matheson & Co.6 Ishii has examined activities of foreign trading companies by analyzing the company’s account ledgers and clarified the extent of “external economic pressure” during the period of reform in the closing phase of the feudal system. However, Jardine Matheson's documents were of limited historical value as historical records because its records regarding the period during and after the 1890s, in which the trading of locomotives became active, are extremely rare and contain very few references to transactions related to railways materials.7 With regard to Japanese trading companies, robust research has been accumulated on the business history of Mitsui & Co. and other Japanese trading companies. For example, in the process of analyzing Mitsui & Co.’s transactions related to machinery, Asajima Shōichi also conducted a detailed examination of transactions related to railway materials including locomotives.8 Taking these preceding researches into account, this study investigates business activities of Japanese and international trading companies responsible for the import and export of locomotives, delving into how these companies mediated the trade.
Keeping the above points in mind, this study takes up locomotives and examines the structure of competition among locomotive makers and also among trading companies in the Japanese market regarding the period from the end of the 19th century to the early 20th century. By implementing a case study on locomotives, exemplary representatives of railway materials and mechanical goods during the period, this investigation aims to answer the following two research questions:
Moreover, this study makes full use of primary historical sources both in Japan and the US, including records held at NARA and those of major American locomotive manufacturers.
In 1871, the first ten locomotives arrived in Japan one after another from Britain. The operation of the first railway in Japan, the government railway line between Tokyo (Shinbashi) and Yokohama, was launched in the following year. At the time, the construction and operation of the government railway relied almost entirely on foreign employees, the vast majority of whom were British. The director, engineer-in-chief, locomotive superintendent, secretary, and others in managerial positions had the authority to decide specifications for railway construction and for material procuring. For this reason, as of 1887, British locomotives accounted for 99% of all the locomotives in Japan, British makers holding a monopoly over the locomotive market.9
From the late 1870s to the early 1880s, the Imperial Government Railways (IGR) carried out rapid localization of various technologies, especially those related to civil engineering. This point can be confirmed through the examination of changes in the number of foreign engineers employed by the government railways. The number of foreign engineers peaked at over 30 in 1874 and fell dramatically in the latter half of the 1870s to under 10 in 1878.10
Underlying such efforts were the cessation of foreign investments stemming from the fear of being colonized and a shortage of funds for railway construction resulting from the inflation after the Satsuma Rebellion which depleted governmental coffers. Both of these elements combined created circumstances under which it was made difficult to hire expensive foreign employees. The replacement of foreign engineers by Japanese ones became an urgent challenge for the survival of the government railways. Having managed to overcome this threat through the establishment of a cadre of Japanese civil engineers, the government railway took subsequent steps to further eliminate the dependence on foreign engineers. In the latter half of the 1890s, those British employees who had the authority to procure materials, such as the British directors, engineers in chief, and locomotive superintendents, were dismissed, and the authority to select and procure railway materials was transferred to the hands of the Japanese. In this transition, those Japanese engineers and managers with the experience of having studied in the US played a pivotal role.
With regard to Japanese managers employed by the Railway Operations Bureau during the latter half of the 1890s, of the six engineers and administrative officials ranked class 3 or higher, four had the experience of having studied in the US. Eventually, the hired British employees were replaced by Japanese engineers and managers, most of whom had studied in the US. It is also notable that both Director (Matsumoto Sōichiro) and Head of Accounting Section (Zushi Tamiyoshi), individuals directly responsible for materials procurement, had the experience of having studied in the US. This largely contributed to the inflow of American products into the railway goods market in Honshu.
Next, the rapid development of private railways is examined. The first railway boom occurred in the mid-1880s, which was followed by the second boom in the mid-1890s. These booms brought about the establishment of numerous railway companies. As a result, during the 1890s, the number of locomotives under private operation became greater than that under government operation, collapsing the government railways’ monopoly on locomotive technology. Except for Nippon Railway, the majority of private railway companies did not receive technical support from the government railways and, therefore, had to secure engineers and railway materials on their own. Kyūshū Railway, for example, hired a German engineering consultant and procured all the materials from Germany. Similarly, Sanyō Railway and other private railways in Western Japan began actively purchasing American-manufactured locomotives at the start of the 1890s. The reason why Sanyō Railway was able to become the first railway company to escape the influence of the government railways and to procure locomotives on its own had to do with the formation of a cadre of Japanese mechanical engineers, the central figure of whom was Iwasaki Hikomatsu (a graduate from the Imperial College of Engineering).
Another factor contributing to the diversification in the procurement sources of locomotives was competitive and selective bidding arrangements that came to be adopted continually by both the government and private railways. That eventually led to the creation of a competitive material procurement system. For example, the Sanyō Railway’s “goods procurement regulations” allowed for both selective bidding and negotiated (limited-tender) contracts. This indicates that competitive bidding was being used also by private companies. The intensification of competition in terms of price and lead time brought about by the introduction of competitive bidding was favorable to American and German manufacturers that had succeeded in reducing costs and manufacturing time through the introduction and development of the American-style interchangeable parts manufacturing. By contrast, British manufacturers, which continued to engage in high-quality production that depended on skilled manual work, were unable to compete in terms of cost or lead time. As a result, in 1897, the number of new locomotives purchased from the US exceeded that from the UK; the share of new locomotives purchased from Germany also increased during the 1900s.
2. The procurement of locomotives through the global marketIn addition, the intensification of international competition in the supply of railway materials resulting from the first phase of the globalization enabled both the government and private railways to optimize the procurement of locomotives on a global scale. Specifically, this led to a dramatic increase in the purchase of American-made locomotives by private railways. Concerns over the penetration of American-made locomotives into the Japanese market are expressed in the following report by a British Consular to Japan dated July 16, 1894:
For railway locomotives, of which there has also been an increased import, the Japanese private railway companies appear inclined to have recourse rather to the United States than to England; and in one recent instance, at least a private company disposed of several of their English built engines to the Government railways, supplying their place with newly-imported American engines at a cost greatly in excess of the proceeds realised by the sale of the old ones11.
In 1896 and 1897, in the midst of the second railway boom, Gerard Lowther, the British Secretary of Legation in Tokyo, composed two detailed reports titled “Report on the Railways of Japan” and sent them to his home country. In these reports, Lowther describes the circumstances surrounding the railway boom in Japan and warned British locomotive manufacturers not to miss this business opportunity. Importantly, he pointed out that the British monopoly over the Japanese market was starting to crumble and urged British manufacturers to prepare for coming competition in the export market of locomotives.
The US was not the only challenger to the British dominance. Among the railways newly established during the first railway boom, some companies such as Iyo Railway and Kyūshū Railway imported technology from Germany. For example, at the time of its establishment in 1888, Kyūshū Railway hired a German engineering consultant, Hermann Rumschöttel, and purchased the full array of railway materials including rails, bridge materials, and locomotives from Gutehoffnungshütte Ironworks via a trading company named C. Illies & Co. Gutehoffnungshütte Ironworks outsourced the manufacture of locomotives to companies named A.L. Hohenzollern and Krauss.
Import sources of locomotives became more and more diversified. In 1887, all but two locomotives in Hokkaidō were British-made (the two being American-made). By 1897, the number of American-made locomotives had increased to 33.8%, and countries of manufacture countries had diversified to include Germany, Switzerland, and Japan.12 As a result of the government and private railways independently procuring railway materials from various countries around the world, there existed a great variety of different locomotives with varying specifications in Japan around the turn of the 20th century.
The main protagonist of American locomotive manufacturers’ advance into Japan in the late 1890s was Philadelphia-based Baldwin Locomotive Works. As has been mentioned earlier, Baldwin Locomotive Works underwent rapid growth from the 1860s through the 1870s, exploiting America’s vast domestic market. By the end of the 1870s, the company had already been extending its business into overseas markets, and it started to develop its export operations in earnest during the early 1880s. As can be seen in Table 1, in 1884, Baldwin Locomotive Works exported 39.6% of its total production, with the primary destinations being Brazil, Argentina, and other countries in Latin America. Exports declined for a short period in the late 1880s, while the domestic market expanded. The stagnation of the domestic market in the mid-1890s led once again to a rapid increase in exports, with exports accounting for 40 to 50% of the total production volume in and after 1894. During this period, Baldwin Locomotive Works developed an international sales network by establishing a branch office in London and concluding business agreements with sales agencies in Havana, Rio de Janeiro, Melbourne, and Yokohama.13 As will be elucidated later, its agency in Yokohama at the time was Frazar & Co. By 1897, exports to Japan accounted for 23% of Baldwin Locomotive Works’ total production volume, making Japan the company’s largest export market (Table 1).
Table 1: Production and Export of Baldwin Locomotive Works (cars)
| Year | Production | Export | Destination | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Domestic (US) | North America | South America | Central America | Europe | Japan | China | South Asia | Other | |||
| 1884 | 429 | 170 | 259 | 6 | 111 | 17 | 3 | 33 | |||
| 1886 | 550 | 42 | 508 | － | － | － | － | － | － | － | － |
| 1887 | 653 | 43 | 610 | 1 | 17 | 23 | 2 | ||||
| 1888 | 737 | 95 | 642 | 3 | 19 | 68 | 2 | 3 | |||
| 1889 | 898 | 212 | 686 | 9 | 114 | 83 | 1 | 3 | 2 | ||
| 1890 | 946 | 144 | 802 | 3 | 46 | 76 | 3 | 12 | 4 | ||
| 1891 | 899 | 292 | 607 | 13 | 166 | 46 | 1 | 6 | 60 | ||
| 1892 | 731 | 127 | 604 | 1 | 56 | 57 | 8 | 3 | 2 | ||
| 1893 | 772 | 162 | 610 | 1 | 78 | 55 | 1 | 27 | |||
| 1894 | 313 | 132 | 181 | 4 | 56 | 38 | 2 | 30 | 2 | ||
| 1895 | 401 | 161 | 240 | 1 | 105 | 18 | 22 | 13 | 2 | ||
| 1896 | 547 | 289 | 258 | 5 | 92 | 33 | 126 | 31 | 2 | ||
| 1897 | 501 | 205 | 296 | 10 | 36 | 16 | 8 | 115 | 12 | 8 | |
| 1898 | 755 | 348 | 407 | 63 | 25 | 37 | 164 | 7 | 1 | 51 | |
| 1899 | 901 | 374 | 527 | 41 | 9 | 65 | 134 | 9 | 16 | 45 | 55 |
| 1900 | 1,217 | 365 | 852 | 32 | 25 | 70 | 139 | 8 | 33 | 14 | 44 |
| Total | 11,250 | 3,161 | 8,089 | 193 | 955 | 702 | 612 | 268 | 62 | 59 | 268 |
Source: Baldwin Locomotive Works, Orders for Engines, 1884-1900.
Notes: “Japan” includes Taiwan and Korea. Chinese Eastern Railway is included in the category of “Europe” (Russia).
Baldwin Locomotive Works first entered Hokkaidō, in which railway construction commenced in 1887 using American technology. Baldwin Locomotive Works received orders for two C tank locomotives for sulfur mines in Hokkaidō on March 8, 1887. The price for each locomotive was 6,250 USD, with the intermediary agency, Frazar & Co., receiving a commission of 5%. According to the sales contract, 1/3 of the total price was to be paid upfront by Frazar & Co., with another 1/3 being paid upon shipment, and the remaining 1/3 being paid upon the arrival of the locomotives (in Yokohama).14 On all occasions, payment was to be made by wire transfer. In 1888, Baldwin received an order for two 1C tender locomotives from Horonai Railway. This was followed by the 1890 order for two 1B1 tank locomotives and ten 1C tender locomotives from Hokkaidō Colliery and Railway. In the latter case, the intermediary agency was Takada Shōkai. On this occasion, the intermediary fees were paid not in the form of commission but in the form of shipping discount equivalent to 5% of the locomotive price.15 The one-time payment for the locomotives was to be made in cash (check guaranteed by Yokohama Specie Bank, Ltd.) within 10 days of shipment. This arrangement differed from that made through Frazar & Co. in 1890 (cases of the government railways and Chikuhō Kōgyō Railway), wherein the payment was to be finalized after the arrival of the products in Japan. This difference in the arrangements suggests that, by around 1890, Frazar & Co. already had already gained the trust of Baldwin Locomotive Works and that it had become regarded as the manufacturer’s de facto sales agency in Japan.
The next entry point for Baldwin Locomotive Works was Kyūshū, which, as had been the case with Hokkaidō, had a thriving mining industry. On July 18, 1889, Baldwin Locomotive Works received an order for one B1 tank locomotive and one B tank locomotive from Chikuhō Kōgyō Railway through Frazar & Co. Baldwin Locomotive Works was able to deliver these locomotives in a little over three months and received high praise for its quick turnaround. Thereafter, Chikuhō Kōgyō Railway became a valued customer for Baldwin Locomotives Works. In October of the same year, it ordered two more locomotives, which were followed by three locomotives in July 1892. In each case, Frazar & Co. received a commission of 5% per locomotive for its work as the intermediary; one-third of the total payment was made upfront in cash, with the remaining 2/3 being paid upon the arrival of the locomotives in Japan (Kōbe). This arrangement became the standard practice for transactions between Baldwin Locomotives Works and Frazar & Co.
After its advance into Kyūshū, Baldwin Locomotive Works finally entered the Japanese mainland in 1890. In December 1889, Baldwin Locomotive Works received an order for two 1C tender locomotives from the government railways through Frazar & Co. These locomotives were shipped in March 1890. For the government railways, this was a trial introduction of American-made locomotives. As has been mentioned earlier, thanks to the enthusiastic endorsement of Baldwin locomotives by Sanyō Railway’s Minami Kiyoshi, the manufacturer received orders for 47 locomotives over the three years from 1892 through 1894 from Chikuhō Kōgyō Railway, Bantan Railway, Hōshū Railway, and other railways connected with Minami.16 In the late-1890s, large numbers of Baldwin locomotives began to be used by the government railways, Nippon Railway, and other private railways that had relied primarily on British locomotives. By 1897, both the government railways and Nippon Railway had become important customers of Baldwin Locomotive Works, with the two railways ordering 38 and 44 locomotives, respectively, in that year.
Experiments to compare British and American locomotives conducted by F. H. Trevithick in 1894-95 played a significant role in the rise of Baldwin locomotives.17 The experiments that compared British (Beyer, Peacock & Co. and Nasmyth, Gaskell & Co.) and American (Baldwin Locomotive Works) 1C tender locomotives led to the assessment that, whereas the British locomotives were superior in fuel efficiency, American locomotives were superior in pulling power and speed.18 After the experiments, Japanese railways began choosing between British and American locomotives in terms of their suitability for specific purposes.
2. Frazar & Co. as an agency for Baldwin Locomotive WorksFrazar & Co., which served as an intermediary for the majority of exports by Baldwin Locomotive Works to Japan, was an American trading company founded in Guangdong (China) in 1834 by George Frazar, an American owner of a clipper ship.19 In 1878, while dispatching one of the partners, John Lindsley, to Yokohama to establish a branch office there, Frazar & Co. began importing American machines into Japan. With G. Frazar’s retirement, the founder’s son Everett Frazar assumed directorship of the company and moved its headquarters to Yokohama, and Lindsley became the head of the New York branch office. As of 1898, Frazar & Co.’s main customers (manufacturers for which the company served as a sales agency) were as follows.20
From this, it is evident that Frazar & Co.’s main business was to import machinery and electrical appliances from American manufacturers and that it served as an agency not only for Baldwin Locomotive Works but also for major electrical appliance manufacturers such as Westinghouse. Furthermore, the composition of Frazar & Co. employees shown in Table 2 indicates that, in addition to its main office in Yokohama, the company had branch offices in Kōbe and New York and that it comprised 17 staff members including four partners. In addition to the company’s own staff, the Yokohama main office also had a permanent sales engineer (W. H. Crawford), who had been dispatched from Baldwin Locomotive Works and tasked with selling railcars. As will be explained in greater detail, this sales engineer played an especially important role in marketing activities of American locomotive manufacturers.
Table 2: Partners and Employees of Frazar & Co. in 1898 and 1904
| Year | Branch | Name | Note |
|---|---|---|---|
| 1898 | Yokohama | Everett Frazar | Owner. George Frazar(founder)'s son, head of Shanghai Branch from 1856, died in 1901. |
| 1898 | New York | John Lindsley | Partner. Head of Yokohama Branch from 1878, retired in 1901. |
| 1898-1904 | Yokohama | Everett W. Frazar | Partner (signs. per. pro.). Everett Frazar's son, owner from 1901, later managing director. |
| 1898 | Yokohama | W.A Crane | |
| 1898 | Yokohama | E. Meregalli | |
| 1898 | Yokohama | W.B. Curtis | |
| 1898 | Yokohama | H.K.A. Onderdonk | |
| 1898 | Yokohama | W. H. Crawford Jr. | |
| 1898-1904 | Yokohama | W.A. Brenner | |
| 1898-1904 | Yokohama | E.M. Barnby | |
| 1898 | Yokohama | A.W. Upton | |
| 1898 | Yokohama | M. Campbell | |
| 1898 | Yokohama | William H. Crawford | Engineer, Baldwin Locomotive Works |
| 1898 | Kōbe | H.J.Rothwell | Partner (signs. per. pro.). Head of Kōbe Branch? |
| 1898 | Kōbe | G.W. Barton | |
| 1898 | Kōbe | C.H. Waters | |
| 1898 | Kōbe | M. Marshal | |
| 1898 | Kōbe | A.W. Crombie | |
| 1904 | Kōbe | S.M. Vauclain Jr. | Engineer, Baldwin Locomotive Works |
| 1904 | Yokohama | Keitarō Nakamura | Japanese employee. Later director |
| 1904 | Yokohama | C.E. Kirby | |
| 1904 | Yokohama | Greig | |
| 1904 | Yokohama | O'may | |
| 1904 | Yokohama | Inuzaki | Japanese employee |
| 1904 | Yokohama | Idzumi | Japanese employee |
| 1904 | Yokohama | Suzuki | Japanese employee |
Source: Yokohama Seimeiroku Hakkōsho ed., Yokohama seimeiroku zen, 72, Mitsui Bussan Head Office, Machinery Division ed., Chōsa ihō higō, hantaishō no kinjyō, dai-ni, 43-46, W. Feldwick ed., Present-day Impression of Japan, 215, Yokohama Kaikō Shiryōkan ed., Zusetsu Yokohama gaikokujin kyoryū-chi [Illustration manual of the foreign settlements in Yokohama] (Yokohama: Yūrindō, 1998), 90, Samuel Matthew Vauclain Jr., Japan Diary 1904 and Japan and Australia Diary 1904 (Degolyer Library, Southern Methodist University, A2011/0020) .
In 1900, the Frazar & Co. partnership was dissolved and the company was re-established as an incorporated company with a capital stock of 800,000 JPY. Upon the death of E. Frazar in 1901, his son, Everett W. Frazar, took over the management of its business. In 1902, he acquired the shares owned by Lindsley, gaining full control over the company. Then, in 1904, Frazar & Co. was merged with C.V. Sale to form Sale and Frazar Co.
By 1919, Sale and Frazar Co. had blossomed into a trading company headquartered in Tokyo with its branch offices, sub-branches, and agencies located in Yokohama, Osaka, Kōbe, London, New York, Sydney, Shanghai, Beijing, Tianjin, and Dalian. The company’s operating structure around 1920 is described by Mitsui & Co. as follows.
In addition to brokering the import of all types of machinery, metal goods, canned foods, phonographs, typewriters, automobiles, aeroplane components, and ships, the finance division of Frazar & Co. is currently expanding its business of buying and selling of all kinds of public bonds. Since the recession of March 1920, Frazar & Co. has conducted steady business by carefully selecting clients and collecting deposits for ordered goods. To manage its expanding business, Frazar & Co. has opened a sub-branch in Hakodate and concluded agency contracts in Beijing and Tianjin. The annual value of goods traded by Frazar & Co. amounts to 20 million JPY. Among its peers, it is a top-notch, extremely well-trusted company. In April 1919, it had a capital stock of 1 million JPY, which was increased to 2 million JPY in January 1920. The payment for the capital has been completed.21
As is mentioned above, Sale and Frazar Co., while maintaining its main business of machinery trading, embarked on financial business during the interwar period and grew into “a top-notch, extremely well-trusted company.”
Continuous transactions with Baldwin Locomotive Works were crucial for the above-described growth of Sale and Frazar Co. Table 3 shows changes in the composition of intermediary agencies that brokered Baldwin Locomotive Works’ exports. 234 locomotives were exported through the mediation of Frazar & Co. over the 11 years between 1890 and 1900. The company handled the third largest volume of Baldwin Locomotive works’ exports after Simon J. Gordon (370 cars), which mainly provided locomotives to Trans-Siberian Railway, and Norton Megaw (324), which dealt with business in Latin America. It should also be noted that, whereas the value of transactions brokered by the top two trading companies fluctuated rather dramatically from year to year, Frazar & Co.’s transactions remained constant over time. In 1897, in which purchases by the government railways and Nippon Railway increased dramatically, Frazar & Co. brokered, if only temporarily, more than 56% of Baldwin Locomotive Works’ exports.
Table 3: Top 5 export agencies of Baldwin Locomotive Works (cars)
| Year | Simon J. Gordon (Russia) | Norton Megaw(SA) | Frazar (Japan, EA) | Sanders (unknown) | Axel von Knorring (Russia) | Others | Agency Total | Export Total |
|---|---|---|---|---|---|---|---|---|
| 1890 | 10 | 6 | 5 | 21 | 144 | |||
| 1891 | 47 | 6 | 65 | 118 | 292 | |||
| 1892 | 15 | 3 | 8 | 26 | 127 | |||
| 1893 | 56 | 24 | 5 | 85 | 162 | |||
| 1894 | 40 | 20 | 3 | 63 | 132 | |||
| 1895 | 22 | 50 | 12 | 22 | 106 | 161 | ||
| 1896 | 122 | 58 | 31 | 21 | 232 | 289 | ||
| 1897 | 7 | 29 | 115 | 20 | 171 | 205 | ||
| 1898 | 126 | 17 | 7 | 24 | 23 | 197 | 348 | |
| 1899 | 60 | 2 | 91 | 14 | 62 | 229 | 374 | |
| 1900 | 33 | 2 | 8 | 127 | 25 | 74 | 269 | 365 |
| Total | 370 | 324 | 234 | 218 | 63 | 308 | 1517 | 2599 |
Source: Baldwin Locomotive Works, Orders for Engines, 1890-1900.
Note: Russia include Chinese Eastern Railway, SA=South America, EA=East Asia.
It is through such continuous transactions that Frazar & Co. became a de facto East Asian agency for Baldwin Locomotive Works. In fact, the manufacturer went so far as to dispatch a sales engineer to the trading company in the latter half of the 1890s. Ōkura & Co. described this special relationship between Frazar & Co. and Baldwin Locomotive Works as of 1901 as follows.
On my trip to Philadelphia the other day, I also visited Baldwin Locomotive Works. Mr. Converse, whom I had met on my earlier visit was not there. However, I was able to meet with Mr. Johnson. Contrary to what Mr. Converse had said, Mr. Johnson explained that, because Frazar & Co. has been an agent of Baldwin Locomotive Works for many years, it would be difficult for Baldwin Locomotive Works, as a practical matter, to provide a price quote for any trading company other than Frazar & Co.22
It can be seen from this description that, at least at the time, Frazar & Co. was indispensable for Baldwin Locomotive Works’ entry into East Asia.
3. Marketing activities of American locomotive manufacturers: Focusing on Baldwin Locomotive WorksAs part of its marketing strategy, Baldwin Locomotive Works dispatched a sales engineer to Frazar & Co., its de facto sales agency, tasking him with conducting sales activities while responding to customers’ technological demands. This was not a unique strategy adopted only by Baldwin Locomotive Works but was a common practice for American manufacturers in general. In a report filed by a British Consulate in Japan on February 22, 1896, this matter is discussed as follows:
As a concrete instance of the result of this experiment in one case only, that of American locomotives may be mentioned. Railways owe their original introduction into Japan to English capital. The only foreign that has ever been employed on them has been English, and it is from English instructors that every Japanese engaged in railway construction or management from the Director-in-Chief down to the humblest mechanic, has learnt all he knows. Originally, all railway plant of every descried was obtained solely from England. But, during the last 5 years, fully one hundred American locomotives have been introduced into Japan both for Government and private railways, and that this has been so is very largely owing, according to one of most experienced merchants in Tokio, to fact that the leading firm of makers in the United States has, for several years past, maintained an energetic export in Japan, who has throughout worked in association with a mercantile firm in Tokio.23
In this report, the British consul points out that, over the previous five years, 100 American locomotives have been delivered to both the government and private railways and emphasizes as a reason for this development the fact that American manufacturers have been working aggressively with Tokyo-based trading companies in their efforts to import locomotives.
The aggressive marketing activities carried out by American manufacturers with trading companies acting as their de facto sales agencies were a topic of discussion also in Japan. For example, Tetsudō-Jihō [The Railway Times] described Kansei Railway’s 1897 competitive bidding as follows.
The trend is for each American locomotive manufacturer to have its own contracted agent in Japan. These agents compete on price to create good relations with both public and private railways. On the 20th of the previous month (September 1897), at the competitive bid held by Kansei Railway for the purchase of six new locomotives, China-Japan Trading Co. based in Kōbe won the contract by submitting the lowest bid price of 8,540 USD per locomotive. This is 100 USD lower per locomotive than the transaction price offered by Takata Shokai, which won the competitive bid held by the Railway Bureau on the 25th of the month before last. Furthermore, the ordering of these locomotives looks to be a bit more troublesome.24
As has been reported by Steven J. Ericson, an example of such direct marketing efforts by American locomotive manufacturers in Japan is the locomotive sales promotion in the East Asian market conducted by Willard C. Tyler, who represented ALCO.25 Tyler visited Japan in 1901 and 1902 as a traveling agent for ALCO, during which he poured his energy into selling American-made locomotives to the government railways and Nippon Railway. Previously, both of them had been under the influence of British locomotive manufacturers. In addition, Ericson refers to W. H. Crawford, a sales engineer of Baldwin Locomotive Works, as a trailblazer in the sales of American locomotives in Japan.26 With this in mind, a closer examination of marketing activities by American locomotive manufacturers in Japan is attempted in the following through a case study of Baldwin Locomotive Works.
In 1897, Baldwin Locomotive Works produced a hard-cover catalog of narrow-gauge locomotives for Frazar & Co.’s use.27 In this catalog, Baldwin Locomotive Works provided the information needed to make sales pitches, including an explanation of standard gauges as well as careful instructions for sales agents regarding ordering methods and telegram codes used for ordering. Many pages were devoted to the explanation of the Vauclain compound locomotive, the company’s newest model at the time. It can be surmised that the presence of sales engineers with specialized knowledge was essential to the selling of new products such as the Vauclain compound.
As has been mentioned above, the first sales engineer dispatched by Baldwin Locomotives Works to Frazar & Co. was W. H. Crawford.28 Crawford played a major role in promoting the export of American locomotives to Japan, selling 200 locomotives to the government and private railways in 1897. In addition, he supervised the building of the Mikado-type (1D1 tender) locomotive purchased by Nippon Railway and assisted Sanyō Railway to switch from British to Baldwin locomotives.29 Crawford’s successor was Samuel M. Vauclain Jr., who was dispatched to Japan in 1904.
Vauclain Jr. was born in 1880 in Philadelphia. His father was Sir. Samuel M. Vauclain, the man who designed the Vauclain compound locomotive. In 1904, while the elder Vauclain was assuming the position of the president of Baldwin Locomotive Works, Vauclain Jr., a promising young engineer, was dispatched to Japan at the age of 24 as a sales engineer in charge of Japan and Australia. However, after falling ill in mid-1905, he returned home, where he passed away in 1913.30 Among Baldwin Locomotive Works-related documents held at Southern Methodist University are Vauclain Jr.’s diary and notebook written in 1904.31 These documents give a clear picture of Vauclain Jr.’s activities in both Japan and Australia. In what follows, Vauclain Jr.’s steps are traced through these documents regarding the year 1904 for the purpose of elucidating marketing activities of Baldwin Locomotive Works.
Vauclain Jr. left Philadelphia on February 3, 1904, and arrived in Yokohama via Hawaii on April 20. He began to work at Frazar & Co. immediately after his arrival. On June 1, he left for his first business trip, an eight-day travel to Hokkaidō. At that time, Vauclain Jr. traveled via Nippon Railway, crossing the Tsugaru Strait from Aomori to Hokkaidō, where he visited Sapporo, Muroran, Iwamizawa, and Asahikawa, meeting with locomotive superintendents of Hokkaidō Colliery and Railway and the Hokkaidō Government Railway Division. The objective of the business trip was to obtain information from the Hokkaidō Government Railway Division regarding the bidding on two Mogul type 1D1 tender locomotives and related components. Vauclain Jr. participated in the bidding held in Tokyo on June 20 along with Frazar & Co.’s staff including Barnby, Frazar, Inuzaki, and Idzumi (Table 2).
Soon thereafter, Vauclain Jr. left for a business trip to Yawata Iron Works in Kyūshū on June 25. However, on June 27, he suddenly returned to Yokohama after receiving a telegram from Baldwin Locomotive Works that arrived to Frazar & Co.’s Kōbe branch. It is unclear what business drew him back to Yokohama at the time. The fact that he subsequently left Yokohama on June 30, returned to Kōbe on July 2, and then left for Australia suggests that the reason was related to the trip to Australia. On this occasion, Vauclain Jr. left a comment on his diary, “Baldwin engines doing all the hard work,” which hints at the demanding nature of his work. On July 12, Vauclain Jr. left for a three-month business trip to Australia. During this trip, he carried out marketing activities all around Australia, while conducting market research in Hong Kong, Guangdong, and the Philippines on the way.
Soon after returning to Yokohama on October 2, 1904, Vauclain Jr. made the rounds to customers in the Kantō area enthusiastically, visiting Hiroshi Hiraoka of Kisha Seizō Co., Ltd. and Tokyo Electric Railway Company in Tokyo on October 15 and Narashino Horse-drawn Railway in Chiba on the 19th of the same month. From October 23 to 29, he traveled to Moji, Osaka, and Kyoto, making the rounds to Kyūshū Railway, Sanyō Railway, Kisha Seizō, Osaka Electric Railway, and Kyoto University. In particular, in the case of Kyūshū Railway and Sanyō Railway, he met with very influential figures such as Mitsugi Sengoku (President of Kyūshū Railway), Sōjirō Suzuki (chief engineer, head of the Kyūshū Railway Manufacturing Dept. and head of the Kokura plant), and Hikomatsu Iwasaki (head of the Sanyō Railway Locomotives Section) to discuss details about component and locomotive orders. For example, on October 28, he discussed a report comparing the performance of Mallet and Vauclain compound locomotives at Sanyō Railway.32
Even after entering November, Vauclain Jr. continued to call on customers enthusiastically, visiting the Imperial Japanese Army Nakano Railway Battalion, Kōbu Railway, the Railway Bureau, and Tokyo Electric Railway in Tokyo on consecutive days from the 15th to the 18th and again traveling to Fukuoka, Kōbe, Osaka, and Kyoto from the 23rd to the 30th to visit the Kyūshū, Hakatawan, and Kansei Railways. During this trip, he spoke with President Sengoku and Kokura plant director Suzuki on November 25 to confirm the information on the production of 500 freight cars and received blueprints for coal cars from the chief engineer.33 From December 7 to 12, he again traveled to Hokkaidō via Nippon Railway, where he visited the Hokkaidō Colliery and Railway Temiya Plant in Otaru and Iwamizawa.
As has been shown above, in the nine months between April and December 1904, Vauclain Jr. was away on business trips inside and outside Japan, including Australia, for a total of 126 days. The destinations of those trips included major railway companies including the Railway Bureau, the Hokkaidō Government Railway Division, Nippon Railway, Hokkaidō Colliery, and Railway, Kyūshū Railway, Sanyō Railway, Kansei Railway, Kōbu Railway, and Hakatawan Railway as well as other sites such as government steelworks, the Imperial Japanese Army, electric railway companies, steam locomotive manufacturing companies, and universities. The purposes of these visits varied widely from participation in bidding and discussion of order details to exchange of information, collection of customer information, and confirmation of contract details. It is worth noting that the majority of orders received by Vauclain Jr. were for replacement parts rather than for locomotives themselves. Once locomotive manufacturers sold a locomotive to a customer, they continually received additional orders for parts needed for maintenance. That was why agents of trading companies or manufacturers made rounds to their customers periodically. Whenever he visited railway companies, Vauclain Jr. was able to meet with heads and chief engineers of locomotive sections and, in the case of Kyūshū Railway, even became acquainted and exchanged information with President Sengoku. From railway companies’ point of view, technical knowledge possessed by sales engineers dispatched from manufacturers was extremely valuable. In Vauclain Jr.’s case, the sales engineer was the first son of a world-renowned engineer and President of Baldwin Locomotive Works, S. M. Vauclain. Therefore, it was valuable to interact with Vauclain Jr. not only for those who worked directly with him but also for those in top management.
That said, there is no doubt that the marketing activities that involved a half-a-year business trip constituted “grueling work.” Presumably, this grueling work was part of the cause of Vauclain Jr.’s illness.34
This investigation has examined the locomotive supply system that supported the rapid development of Japan’s railway industry at the turn of the century, focusing on the independence of Japanese mechanical engineers and the export of American-made locomotives to Japan. As a result, it has demonstrated how American locomotive manufacturers dismantled the British monopoly and penetrated the Japanese market, shedding light on changes in technological development and business systems on the demand side (i.e. railway companies) and roles of international trading companies that mediated the import of locomotives. Concerning the last point, a case study of Frazar & Co., a sales agency for Baldwin Locomotive Works, has been carried out. It has been an investigation into cooperation between trading companies and makers regarding their marketing activities in the locomotive trade.
In conclusion, answers are given to the two research questions: 1) Why Japanese railways were able to achieve the smooth procurement of locomotives during the first global economy; 2) What were the factors that made it possible for U.S. makers to enter the Japanese and East Asia locomotive markets and expand their shares there.
To answer these questions, both domestic and international factors have to be taken into consideration. As for domestic factors, the following four were crucial.
As for international factors, the following were essential.
Although all the factors were indispensable, this investigation has focused on ①, ④, ⑥, and ⑦.
The factors ① and ④, which concern the answer to the first question, were the foundation of Japanese railway development. During the 1890s, Japanese engineers came to decide specifications of railway materials and freely order them through Japanese or foreign trading companies. That was an important element for the achievement of the smooth procurement of locomotives, and one of the backgrounds of the development of Japanese railways.
The factors ⑥ and ⑦, which concern the answer to the second question, were American locomotive makers’ marketing tools. During the second railway boom between 1893 and 1899, the emergence of large numbers of new railway companies and the expansion of existing railway companies resulted in a sudden rise in the demand for locomotives in the Japanese market. It was Baldwin Locomotive Works and other American manufacturers that responded promptly to this demand increase and expanded their shares in the Japanese locomotive market. At the time, American locomotive makers dispatched traveling sales engineers to Japan, and those engineers cooperated with their agencies there. This type of direct marketing activity, which exerted great effect on the development of the emerging market, was a unique characteristic of American makers. That was one of the reasons why British manufacturers fell behind them.
In addition, roles played by trading companies engaging in the locomotive trade in East Asia have to be highlighted. Of course, sales engineers, such as Summuel Vauclain Jr., could not speak Japanese or Chinese and did not have connections with their customers. Trading companies, such as Frazer & Co., introduced him to engineers of railway companies, government officers, and academicians in Japan and in China. In emerging markets, research and transaction costs borne by makers and customers were very expensive. Trading companies, whether located in Japan or in China, had information related to the emerging market and contributed to containing these costs.
1 This research was supported by JSPS KAKENHI Grants, No. JP20H01521.
2 Geoffrey Jones, Multinationals and Global Capitalism: From the Nineteenth to the Twenty First Century (Oxford: Oxford University Press, 2005).
3 Sawai Minoru, Nihon Tetsudō sharyō kōgyō-shi [A history of Japan’s railcar industry] (Tokyo: Nihon Keizai Hyouronsha, 1998).
4 John K. Brown, The Baldwin Locomotive Works: 1831-1915 (Baltimore: John Hopkins University Press, 1995).
5 Steven J. Ericson, “Importing Locomotives in Meiji Japan: International Business and Technology Transfer in the Railroad Industry,” Osiris, second series 13 (1998) and “Taming the Iron Horse: Western Locomotive Makers and Technology Transfer in Japan, 1870-1914,” in Public Spheres, Private Lives in Modern Japan, 1600-1950, eds. G. L. Bernstein, A. Gordon, and K. W. Nakai (Cambridge Mass.: Harvard University Press, 2005).
6 Ishii Kanji, Kindai Nihon to Igirisu shihon [Modern Japan and the British capital] (Tokyo: University of Tokyo Press, 1984).
7 Ishii, Kindai Nihon to Igirisu shihon, 403-405.
8 Asajima Shōichi, Senzen ki Mitsui Bussan no kikai torihiki [Mitsui & Co.’s machinery trade in the per-war era] (Tokyo: Nihon Keizai Hyouronsha, 2001).
9 See Sawai, Nihon tetsudō sharyō kōgyō-shi, 27.
10 Nakamura Naofumi, Umi o wataru kikansha [Locomotives from across the sea] (Tokyo: Yoshikawa Kōbunkan, 2016), 94.
11 Foreign Office (UK), “Report on the foreign trade of Japan for the year 1893,” Diplomatic and Consular Reports, 16 July 1894, 9.
12 Sawai, Nihon tetsudō sharyō kōgyō-shi, 27.
13 Brown, The Baldwin Locomotive Works, 44-46.
14 See, Nakamura, Umi o wataru kikansha, 158, Table 3-6.
15 Philip Scranton, who has analyzed order books of an American machine tool manufacturer, G. A. Gray, explains that discounts awarded by manufacturers to dealers were used as a means of paying the dealers’ sales commissions (Philip Scranton, Endless Novelty: Specialty Production and American Industrialization, 1865-1925 (Princeton: Princeton University Press, 1997)). In the case of Baldwin Locomotive Works, however, either commissions or discounts were used depending on the dealer. Based on the fact that orders where the dealers received commissions were aggregated under the category “ordered through agency,” in this book, “commissions” are distinguished from the typical brokerage fees paid to dealers and are interpreted as intermediary brokerage fees paid to agents. For more information, see Baldwin Locomotive Works, Orders for Engines, 1890-1892 (Smithsonian Institution Archives Collections, Baldwin Locomotive Works Collection #157).
16 See, Nakamura, Umi o wataru kikansha, 158, Table 3-6.
17 See, Nakamura, Umi o wataru kikansha, 35-38.
18 Nakamura Naofumi, “Reconsidering the Japanese Industrial Revolution: Local Entrepreneurs in the Cotton Textile Industry during the Meiji Era,” Social Science Japan Journal 18, no.1 (2015), 54-55.
19 Mitsui Bussan Head Office, Machinery Division, ed., Chōsa ihō higō, hantaishō no kinjyō, dai-ni [Secret research reports, the recent situation of competitors, no. 2] (Tokyo: Mitsui & Co., around 1920), 43-46, Morita Chūkichi, Yokohama seikō meiyo kagami [Who's who directory in Yokohama] (Yokohama: Yokohama Shōkyō Shinpō-sha, 1910), 831-832, and W. Feldwick, ed., Present-day Impression of Japan (Yokohama: The Globe Encyclopedis Co., 1919), 215.
20 Yokohama Seimeiroku Hakkōsho, ed., Yokohama seimeiroku zen [Biographical dictionary of Yokohama] (Yokohama: Yokohama Seimeiroku Hakkōsho, 1898), 72.
21 Mitsui Bussan Head Office Machinery Division, ed., Chōsa ihō higō, hantaishō no kinjyō, dai-ni, 45-46.
22 Letter from New York Branch (Majirō Yamada) to Tokyo Head Office on 13 August 1901, Tokio Letter No. 1 (1901-1902), RG131/A1/Entry-124/856 Okura (NARA), 21-24.
23 Foreign Office (UK), Diplomatic and Consular Reports on Trade and Finance, Annual series, no.1695 (1896), 44.
24 Unknown, “Kikansha kyōkyū no kyōsō” [Competitions in the supply of locomotives], in Kōgyō Zasshi [Engineering Magazine], no. 133 (November 1897), 23.
25 Ericson, “Importing Locomotives in Meiji Japan,” 146-147.
26 This is a different Crawford from Joseph Ury Crawford, a former consulting engineer for the Hokkaidō Development Commission, who had returned to the US by 1901 and was living in Philadelphia at the time (Ericson, “Taming the Iron Horse,” 203).
27 Burnham, Williams & Co., Baldwin Locomotive Works Narrow Gauge Locomotives, Japanese Edition, Frazar & Co. of Japan Agents, Yokohama (Philadelphia: J.B.Lippincott Co., 1897) (SMU, TJ625, B41, 1897ja).
28 As of 1898, W. H. Crawford was stationed in the Frazar & Co. Yokohama office as an engineer employed by Baldwin Locomotive Works. There, he was engaged in the marketing of Baldwin locomotives in Japan (Yokohama Seimeiroku Hakkōsho, ed., Yokohama seimeiroku, 72)
29 Ericson, “Taming the Iron Horse,” 202-203.
30 Samuel M. Vauclain and Earl Chapin May, Steaming Up! The Autobiography of Samuel M. Vauclain (New York: Brewer & Warren Inc., 1930), 194-200, and The Historical Society of Pennsylvania, Vauclain family papers and genealogical research material, Collection 3666 (Philadelphia: The Historical Society of Pennsylvania).
31 Samuel Matthew Vauclain Jr., Japan Diary 1904 and Japan and Australia Diary 1904 (SMU, A2011/0020).
32 Samuel Matthew Vauclain Jr., Japan Diary 1904, Oct.28.
33 Samuel Matthew Vauclain Jr., Japan Diary 1904, Nov.25.
34 Samuel M. Vauclain and Earl Chapin May, Steaming Up! The Autobiography of Samuel M. Vauclain, 200.
