The Mechanism of Cotton Transactions and Capital Accumulation of Giant Cotton Spinning Companies around the Turn of the Century

Abstract

In this article, I study how the establishment of the cotton transactions mechanism in Japan around the turn of the century contributed to the accumulation of capital of giant cotton spinning corporations. This period is commonly said to be the one in which the spinning industry has firmly taken its root. In this period also the profit rate (i. e. rate of profit to the paid-up capital) differentials as to the scales of the enterprises became fairly obvious. Along with these developments the cotton transaction mechanism has undergone a remarkable metamorphosis. That is to say, the special relationships between the cotton merchants and the specific spinners called 'special contract spinners' were developing. The special contract spinners earned the following two advantages from this position. Firstly, they could buy cotton on credit terms and secondly, the cotton merchants ensured to them the supply of good quality cotton. Take the case of the Kanegafuchi Spinning Company, one of the biggest spinning companies in Japan. Although it had to pay relatively high wages because it had factories in Tokyo, it could accumulate capital very rapidly due to the circumstances that it could purchase an unlimited quantity of cotton on credit and that it was guaranteed the supply of good cotton. Because the demand for good cotton yarns was increasing at the time and credit transactions were being more and more limited in its scope, while the general prices of cotton were experiencing wide fluctuations, such a special contract must have been very important for the capital accumulation of huge cotton spinning undertakings.