Episode 22 – Dr. Mark Metzler (Washington)

Originally published on March 30, 2018
[This transcript has been edited for clarity.]

Tristan Grunow: This is the Meiji at 150 Podcast. I’m Tristan Grunow. In this episode, I’m talking with Dr. Mark Metzler, Professor of Japanese History in the Department of History in the Henry M. Jackson School of International Studies at the University of Washington. His most recent publication is Central Banks and Gold: How Tokyo, London and New York Shaped the Modern World, published by Cornell University Press in 2016. Dr. Metzler, thank you for being here.

Mark Metzler: Thank you for inviting me.

TG: Much of your research has looked at global history. So from the perspective of the outside world, what is the position of the Meiji Restoration?

MM: Well, I think there’s a lot of ways that you can approach that. The Japanese postwar prime minister Ishibashi Tanzan – one of Japan’s most famous economic journalists, a famous Keynesian writer in the 1930s – described the Meiji Restoration as the time that the waves of the British Industrial Revolution reached Japan. Nowadays, that wouldn’t be a very fashionable point of view among historians I don’t think, but in fact, I think there’s a lot to it: think of the imagery of Perry’s steam-powered or hybrid steam-powered ships coming into Japanese waters and the impression that made in 1853-1854, think about the series of wars that the British were fighting in China using steamships as a secret weapon in 1839-1842, again in the late 1850s, at the time that Japan was forced open to trade with that as a threat in the background. So, even if we think of it strictly from the side of military technology, we can say steam and fossil fuel has something to do with it.

TG: And looking at the records from the time around the Meiji Restoration, I was always struck by how much international events come into the thinking of people leading up to the Restoration and immediately after the Restoration as well. They’re very well aware of what’s going on in the Opium Wars, and they’re talking about what’s happening in Egypt, for example. And so, the international events certainly do seem to be impacting the Restoration and the direction that the Meiji leaders take immediately following the Restoration.

MM: Yes, I think absolutely, the Restoration can be understood in that way, as an event in global history. I think we can also understand it from the standpoint of global trade (that might be something we want to talk about a little bit more). I think we can also understand it as an event within the stream of Japanese history if we think about it in big, long secular terms. If we think about Japan’s demographic history for example, I think the Meiji Restoration (maybe not the Restoration itself, but the transformation of the 1860s broadly speaking) looks like a major hinge in time. It looks like a shift in the demographic regime from a population that hadn’t been growing for more than a hundred years (a long period of zero population growth) to a period of very rapid population growth. That would be just one example. In my own research, I’ve been interested in the monetary aspects of it, and looking at the change in Japan’s monetary system. Again, with the hinge in the 1860s and the tremendous inflation that happens in the 1860s that deranges social relationships of all kinds, that radically destabilizes the position of the samurai class, all these things are going on simultaneously. So, whether we look from the outside in or from the inside out, it’s truly a turning point, I think, on a scale that has very few peers in the long history of Japan, in the many long centuries of Japan.

TG: And talking about these kinds of longue durée approaches, looking at larger shifts over the entire 19th century, for example, and even global trends around the time really brings to question of are we perhaps fetishizing the year 1868 too much?

MM: I don’t think so. Recently, I think if anything, the tendency among historians has been to look for continuities across the presumed ruptures that so often serve as the beginning points and the end points of the courses that we teach: modern Japanese history begins with the Meiji Restoration for example or the beginning and endpoints of books that are written and so on. In this case, I don’t think it’s an exaggeration to see this as a rupture point, and though it’s not an object of my own research, I’ve read enough autobiographies and enough accounts (biographical accounts) of this period to know that ordinary people, huge numbers of people, experienced it perhaps not immediately in that year, but in the retrospect of 10 years or 20 years as the difference between one historical era and another in the most acute way, in a more acute way than I think many of us can imagine (people who live in North America and have lived under long, continuing constitutional regimes without this kind of rupture).

I think that people who have lived through radical periods of revolutionary change in other countries (perhaps the change from the Soviet Union to Russia, the changes that happened in many European countries during World War II, the Chinese Revolution) are comparable instances. But yes, I don’t think we put an exaggerated attention on these particular years. I think it’s fully justified.

TG: Your books, to date, have all looked at the economic history of Japan, so can you give us a few examples of how the economics of Japan change after the Meiji Restoration? Or maybe how finance changes?

MM: One of the things that stands out most for me is the changes in prices, and I think maybe it’s worthwhile to stop for a moment to think about what prices are that… The price of rice, for example, really reflects a complex composite of not tens of thousands, not hundreds of thousands, but in the case of Japan, millions and millions of personal transactions and relationships. It’s arguably the most important number (the price of rice) for ordinary people, for the national economy. It reflects a huge number of things, it can be very informative, and obviously, it shaped people’s lives in a dramatic way. If the price of rice doubles or triples or quadruples in the course of a year, obviously, that affects everyone, and this is exactly what was happening during these years. During the 1860s, Japan had a historic inflation, especially seen in rice prices, and especially in those two years right before the Meiji Restoration. We see a sudden increase in rice prices, a kind of “bubble” in rice prices in 1866, then a falling back down of rice prices in 1867. In the whole statistical record of the 19th century, no other event comes close, so in some kind of purely numerical, statistical way, even if we didn’t know that there was a major political event at this time, if we looked at those numbers, we would say: “Something big was happening at this particular point in history.”

If we put that together with the history of rice riots in Japan and the very careful statistical compilations that have been put together by Japanese historians, particularly by Professor Aoki Kōji who put together a very famous study of peasant uprisings during the Edo period and the early Meiji period (really, a year by year [analytic] account and then statistical compilations). In those accounts, the year 1866 (two years before the Meiji Restoration, a year before the revolution, perhaps the year of the revolution if we want to think about the civil war in the summer of 1866 between Chōshū and the shogunal forces that really decisively tipped the balance and decisively broke the prestige of the shogunate), if we think about those years as the years of revolution once again, happening on a completely different social plane from the politics involving the samurai class, these political battles among the samurai class, we see peasants engaging in revolt in a level completely without precedent in the entire Tokugawa period.

There’s a long-run tendency toward an increasing number of both peasant uprisings and urban riots as Aoki’s account makes clear, but 1866 in terms of the other records really sets an entirely new level for both of the things. It’s a complete standout year, completely, in fact, surpassing moments of extreme famine and crisis that we see in earlier periods of Tokugawa history (for example, the 1830s, 1780s). So in that sense also, whether we’re looking at prices, whether we’re looking at the expression of grievances by the commoner class in a form that’s defined as illegal and a form that’s defined as rebellion, this would stand out, also, in the history of the 19th century. Those are just two examples, but I mentioned demography already.

If we were to look at the structure of trade, we would see really just epochal transformations going on within the scale of trade (already happening a few years before the Meiji Restoration )and in the composition of trade. These things are happening within an industrial structure or an economic structure that is basically continuous. If we want to talk about aspects of continuity, Japan’s economy across the 1860s wasn’t changing because of Western technologies except in one particular sense, and that’s transportation technology, that’s access to foreign markets via foreign shipping. But otherwise, if we would look at how things are made in Japan, how things are distributed within Japan, technological change would not yet be a significant part of the story. Later on, it’s going to be that, but that all takes time for technological changes, new industries really to become statistically significant. That’s maybe about 20 years after the Meiji Restoration. That’s going to take, really, a generation-long process of making those technologies or finding homes for those technologies in Japan. Nonetheless, the changes going on in economic structure are absolutely profound and happening in a very concentrated way within just a few years.

TG: In thinking about economic aspects of the Meiji Restoration and causes of the Meiji Restoration itself, there’s always the story of samurai impoverishment and the lower ranking samurai who are the ones leading the Restoration cause. But that’s more talking about personal motivations, right? If we were to make an economic case, what kinds of economic causes are there for when the Restoration happens?

MM: That, I can’t quite answer. I haven’t looked into it sufficiently to be able to give a good answer, but I can offer a strong hunch or a strong idea of a place to look, and that would be to look at debt, to look at relationships of debt, and this would bring together the story of the samurai class, the chronic indebtedness of the samurai class. It would bring that together with the picture of price history with sudden derangements in pre-existing price structures in the price of one commodity versus another commodity (radical increases in prices happening in a very brief time period for example). And that would bring together the economies of ordinary people, of people who are producing silk (now for international markets), who are borrowing in order to expand their own silk production in response to booming market demand. And then perhaps, they’re finding that they’re overborrowed.

Maybe we don’t need to use the word “perhaps” because we know that this happened, and we know that one of the motivations of many of those rioters…The riots were concentrated, especially in the silk-producing districts. The motivations did involve grievances about debt in addition to grievances about taxes on silk production and so on. So, we know that those everyday economic motivations were present on the part of commoners, at least a kind of underlying story in the motivations of samurai patriots who may have been relatively detached from economic considerations, maybe the wandering political radicals that played such a big role in these movements were living a life subsidized by others. They were finding patrons to support them to the extent that they had any support at all, so they may look like they were relatively detached from the economy but yet, they come from a social milieu in which debt was absolutely conditioning everything. So if I were to look at it, that’s the one issue that I think I would take as a wedge, as a method for getting at some of the economics of the Meiji Restoration.

TG: And debt certainly seems to weigh heavily on the minds of the Meiji leaders earlier in the Meiji period.

MM: Absolutely.

TG: As Inoue Kaoru resigns as Vice Minister of Finance in 1873, I believe, he announces to the world how much in debt the Meiji government and it’s some astounding number. But when thinking about all of the state-building projects that the state is undertaking (building the railways, building the telegraphs, the lighthouses), it really drives home how much money they were spending in the project of building this new nation.

MM: And the Tokugawa bakufu has already been engaged in many of these projects in fact, and has already taken on large debts to foreigners, has already taken on a degree foreign debt. Various daimyō have taken on debts. They’ve been buying ships from the foreigners. The shogunal government has been buying warships from Western merchants (buying second-hand ships) because of the political crisis within Japan and because of their fears of foreign countries engaging in expensive military modernization efforts and so on. And the old government is facing a fiscal crisis. So if we were to look at the level of state policy, I think we would also see so much of it being conditioned by debt during this period.

TG: And as you mentioned, there was always a hesitancy to allow foreign investors. So when they’re building the railway, for example, yes, they do take a loan out from the Oriental Bank, but there’s always a reluctance to allow foreigners to invest in Japanese industries. And that brings us back to how aware the Meiji leaders were of Western practices of imperialism in other places. I mean, there are references to what Cromer is doing in Egypt, for example: bankrupting the Egyptian state as a way to get English influence into Egypt, and they’re very well aware of these global current events.

MM: Yes, and I think increasingly aware. This becomes a bigger and bigger story as we get further into the Meiji period, and by the time we get into the 1880s, which is really the second phase of an international debt crisis, Japanese leaders are very well aware of that. But in fact though, it doesn’t affect Japan directly. It’s interesting to think about the fact that the early Meiji period reforms are really taking shape initially in the years of the international economic boom, and an international economic boom that’s being funded by enormous foreign bond issues, especially coming out of London (also coming out of Paris, but especially coming out of London) in a way that’s never been seen before in world history.

So if we think about what’s going on in the world during these years, think about North America, for example, think about the Transcontinental Railroad. I’m not remembering the exact date for the Transcontinental Railroad, but it’s the summer of 1871 that that’s completed. The Suez Canal has just been completed, Trans-India Railway has just been completed. All of these events are happening right around 1869, 1870, 1871 – the rapid extension of steamship services involving rebuilding of ports, making port facilities that are suitable for the new style of steamship during this time and multiple examples involving steamship service, the railroadization of many areas of the world – are enormously expensive. And all of these things involve enormous international lending coming out of London. Japan’s involved in that in a very limited way: as you mentioned, the Oriental Bank Loan for building a Japanese railway, and the Japanese government even at that point is sensitive to the implications.

After 1873, a historic international debt crisis breaks out. There have already been some sovereign defaults before this time, but in the years 1873, 1874, 1875, global commodity prices are falling, and one country after another is declaring bankruptcy on those debts. You mentioned that maybe the most fateful example of all is Egypt, and Egypt is defaulting on its debts (enormous debts taken out during the mid-century cotton boom). Egypt is defaulting on its debts in 1875-1876. That’s going to become the occasion for increasingly intrusive control by the British and French bondholders, culminating (in 1882) in the outright British invasion of Egypt.

All of that is justified in the name of the rights conferred to creditors. Lord Cromer’s – as he names himself in effect, the British viceroy in Egypt (under the authority of the dual British-French administration, but in effect a kind of viceroy) – whole program is to ensure that Egypt repays its debts. The Meiji leaders are absolutely aware of this and using this as an argument against taking up foreign loans. This really brings it home, but I think that awareness that debt implied subordination pre-existed the Meiji Restoration, something that was very much in people’s minds already. If we go back to the Tokugawa period, that implied a radical, inappropriate reversal of social hierarchies when samurai are in debt to merchants who are supposed to be their social inferiors. All of this is very much forming people’s common sense about what debt means I think.

TG: And Inoue Kaoru in the 1890s flips the script with Cromerism. Whereas previously, the Meiji leaders were concerned about foreign debt in Japanese industries, they used the same tactics against Korea.

MM: Absolutely.

TG: When they’re first negotiating the Seoul-Pusan Railway, Inoue Kaoru, who’s the ambassador plenipotentiary at the time, actually floats the same kind of idea that Cromer does: “We can sign a treaty to build a railway with the Korean government, and if they default, well, we get to own it eventually.”

Talking about all of the defaults in the 1870s, I was thinking about what was happening in Japan in the 1870s. Of course, in 1873, we have this big schism in the government, which then sets up a number of samurai rebellions: the [Saga] Rebellion of 1874, the Shinpūren Rebellion and of course, culminating in the 1877 Satsuma Rebellion. Is this another moment of rebellions that we saw in for example, in the 1860s? Are these economically motivated?

MM: I can’t answer that because I haven’t really looked into that, but I could virtually guarantee that if one dug into it with that question in mind, one would find an economic story that would, in fact, be part of it. Certainly in the effect of those rebellions, it’s enormously consequential economically speaking: the financing of the rebellions, the loan financing schemes involving the national banks generate an inflationary boom that becomes an increasingly speculative boom after the Satsuma Rebellion particularly in 1877.

So the Satsuma Rebellion (which is called a “war” in Japanese: the Seinansen or the Southwest War) really, in terms of its profile of economic history, does indeed look like a war with an inflationary boom, classic inflationary style war financing followed by a deflationary bust afterwards, and that deflationary bust is called the Matsukata Deflation. So, if we take that word seriously that this was a war, it certainly looks that way economically speaking. Again, I don’t know about the causes of the motivations of the samurai who were there in Kyūshū resisting the new government. But no doubt, as with everything else, human history is integral, and there are economic aspects to everything.

TG: And in the ‘80s, we get Freedom and Popular Rights Movement, which turns violent after the 1880s: the Chichibu Riot in 1884 is the biggest of all rice riots. You were talking in your lecture last night about how these boom and bust cycles are very cyclical: you were pointing out that in every decade, there is a similar crisis. Is it perhaps possible that the rebellions are also part of this cyclical process where there is the economic crisis that leads to rebellions as far back as 1850s, ‘60s, ‘70s, ‘80s, going into the Taishō period when we have this era of violence in Tokyo, which also is economically motivated in some sense by rice prices?

MM: Yes, I guess there are several different modalities of relationship there, but definitely, we can see that these things are continually interacting in these mass movements, violent opposition movements, with these economic movements. You mentioned what was going on in the 1880s (I believe it was 1884 with the Chichibu Uprising), which absolutely had to do with debt. The peasants were forming themselves into parties, and sometimes describing their groups as “debtors’ parties,” very much in the pattern of late Edo period uprisings targeting local moneylenders and so on. So in a condition of falling prices for silk, falling prices for rice during the Matsukata Deflation years, debts (which were fixed in money terms) became harder and harder to repay. The real weight of the debt if rice prices fall by 50% has increased by the same proportion: it is doubled, and one needs to deliver twice as much rice in order to be able to repay that money debt at that same level. For people who are already operating on extremely narrow margins, perhaps weren’t even making it in good times. It’s complete disaster, it’s breaking people’s lives, and you can see the consequences there. That’s one modality: the debt deflation modality, and it’s something certainly not unique to Japanese history. This is a theme in the history of many times and places as far back as there was debt, and debt goes as far back as history goes back.

TG: The ikki of the medieval period right?

MM: Yes, we see it very early. We see it as early, as (I think) certainly the Muromachi period. We see how much debt was bound up with the peasant uprisings there. Another modality would be the inflationary modality. Maybe we could label it the “rice riot type of modality,” which could also be rural events. If we’re talking about, again, silk producers who are specialized in silk production who need to buy rice on the market in order to eat, they’re going to be affected just as urban dwellers would be affected by high rice prices. We can see rice riots in response to excessively high rice prices, we can see that on occasion during the late Edo period, we can certainly see it on the eve of the Meiji Restoration, in the year 1866, when there’s just an extraordinary rash of both rural and urban riots when rice prices were spiking due to speculation in the rice market, due to the shōgun/shogunal armies’ purchases of rice in the rice market, and a number of other factors (weather factors as well).

And we can see it again very classically of course in the World War I era. Rice riots in 1918 were the biggest of all and again, has to do with the case of wartime inflation and massive urban riots, and that’s a global story. That’s not just a Japanese story. All around the world, there are bread riots and rice riots, particularly in the year 1918 when prices were jumping up so high. But in the years around that time (1917, 1918, 1919), this is something that you can find in the history of numerous countries. So, it really is a classic nexus between prices and popular unrest, which by the time we get to 1918, is often taking on a very new, hard ideological edge. There’s a new language of socialism and after 1917, Leninism is increasingly informing many of these movements, and those things are really coming right together.

TG: It really emphasizes how important monetary and fiscal policy was for the Meiji government, and methodologically, how important economics are to our research in general. We can never seem to escape economic history.

MM: Though I think economic history, for a generation, has maybe gone out of fashion in most North American history departments, but there is no escaping it, and it comes back into every other aspect of history, and we don’t need to stretch very far to find the economic dimensions of those things, I don’t think.

TG: The Meiji at 150 Podcast is hosted by Tristan Grunow at the University of British Columbia in Vancouver, Canada. This podcast would not be possible without the cooperation of the UBC Centre for Japanese Research and the technical assistance of the UBC Faculty of Arts ISIT. Find out more about the Meiji at 150 Project, including the Meiji at 150 Lecture Series, Digital Teaching Resource and Workshop Series by visiting our website: meijiat150.arts.ubc.ca. Thank you for listening.


*Citation for this episode:

Mark Metzler, interview with Tristan Grunow, The Meiji at 150 Podcast, podcast audio, March 30, 2018. https://meijiat150.podbean.com/e/episode-22-dr-mark-metzler-washington/.

The Meiji at 150 Podcast is hosted, produced, and edited by Tristan Grunow, with editorial assistance from Joshua Linkous. Transcripts by Kelly Chan.