South Manchuria Railway saw its number of private shareholders increase by 59,787 between 1927 and 1940, a level of growth in a class by itself, but that proliferation was not due to the fact that was listed on stock exchanges across the country. The prewar Japanese stock market was beset by bad circulation of share certificates and a prevalence of off-exchange trading (transactions that took place outside the stock-market environment), and South Manchuria Railway was not immune to the effects of those limitations. On top of the characteristics defining the prewar stock market, there were also many risk factors that affected shareholders both before and after the acquisition of shares: the pre-acquisition risks that fraudulent securities dealers posed and the post-acquisition risks of a legal framework that did not provide protections for purchases in good faith and without negligence. Despite the many barriers and risk factors standing in the way of share ownership, South Manchuria Railway saw its private shareholder count surge. Fueling the increase was a “correction” process in the market. When the Manchurian Incident prompted numerous existing shareholders to distance themselves from the company and begin selling off their share certificates, the influx of available shares created a rush of opportunities to buy them—and thereby make stock investments—for individuals who had almost never been able to do so in the years prior. That opportunity gap is what drove the increase in South Manchuria Railway’s private shareholder count. Although the shift finally let a broader base of individuals buy shares, Japan’s demise in the Second World War reduced those long-coveted certificates to mere scraps of paper. The resulting damage would then shape the groundwork for the bank finance of postwar Japan.

Abstract

Strains were evident in the supply and demand for electric power during World War I. Taiwan Electric Power Co., Ltd. was founded in 1919 during the postwar economic boom in order to carry out the Sun-Moon Lake (Jitsugetsutan) project, whose purpose was to develop of a high-capacity hydroelectric power plant. However, there was no clear electric power consumption plan that would have been able to mitigate the lack of investment incentives. After the postwar economic panic, procuring financing from the capital market stagnated, and the project was suspended. Following this experience, Taiwan Electric Power Co., Ltd. in the second half of the 1920s drew up an investment funds redemption plan based on a power consumption plan that seemed more certain to be realized. Against this backdrop, there was a steady increase in small-lot demand mainly from the rice husking and rice polishing industries. The capital needed for the project was procured thanks to the issuance of foreign bonds in June 1931. However, the investment funds redemption plan collapsed due to a foreign exchange loss that came with a crash in the yen exchange rate six months later. Taiwan Electric Power Co., Ltd., having reduced its foreign exchange loss by purchasing its foreign debt, was able to capture large-lot demand by selling electric power at cut-rate prices. In the mid-1930s, it put its investment funds redemption plan on course and won the confidence of the capital market. The problem of insufficient investment incentives disappeared, and Taiwan Electric Power Co., Ltd. was able to procure the capital needed for developing new sources of electric power from the capital market by issuing new shares.

In 1920, Japan launched the “Plans for Increasing Rice Production” in Korea (“Chōsen” in Japanese) to boost rice imports through expanded rice production. The impetus for the new policy lay in two key developments: the “rice riots” that swept through Japan in 1918 amid plummeting rice prices, first of all, and the “March 1st Movement” that erupted in Korea in 1919. A vital piece of the Plans for Increasing Rice Production was the Chōsen Shokusan Ginkō (Chosen Industrial Bank; “CIB”), which represents the main focus of this paper. To procure its funding, the CIB issued bonds in enormous sums (“CIB bonds”) that made the bank not only a major channel for Japanese investments in Korea but also a key investment target in the Japanese capital market. This paper shines new light on investments in Korea through the interwar Japanese capital market by examining the issuance conditions for CIB bonds to show how the bonds occupied an increasingly important position in the capital market, delineating the ways in which the composition and underwriting approaches of the underwriting syndicates behind the bonds transformed as securities companies competed and cooperated in the capital market, and explaining financial institutions’ holdings of over 40% of the outstanding balance of CIB bonds.

This study investigates price determination methods of kimono fabric dealers in early modern Japan, conducting a case study of Naraya, a Kyoto-based merchant that had branches in the Kantō region (Edo and its neighboring areas). In order to cope with data availability limitations, the investigation utilizes historical records of other major Kyoto-based merchants with Edo branches and those of modern times as well. There were two price determination methods: namely, the “uchi-mashi” and “soto-mashi” methods.

Uchi-mashi: Cost ÷ (1 - (Profit percentage ÷ 100)) = Selling price

Soto-mashi: Cost × (1 + (Profit percentage ÷ 100)) = Selling price

Naraya used the uchi-mashi method for “kudari mono [kimono fabrics purchased in Kyoto and sent down to the Kantō region].” With regard to “kantō mono [kimono fabrics purchased in the Kantō region],” the soto-mashi method was adopted. There were three pre-determined profit rates applied in the calculation, corresponding to three different categories into which commodities were classified. In the case of kudari mono, however, it was a common practice that prices were increased higher than calculated selling prices depending on the quality of fabrics and popularity of their designs. In addition, there were unique business practices concerning price tags. When commodities were sent from Kyoto, prices were doubled, and such doubled prices were written on price tags. “Cash only, price on the tag” sales were also held. In introducing these practices, Naraya followed precedents of major merchants that had branches in Edo. This is the first Japanese economic history study that gives an in-depth analysis of early modern merchants’ actual business practices concerning price determination.