¹ Zaibatsu means a financial clique. For the nature and extent of economic power enjoyed by the Zaibatsu families, see Yamamura, Kozo, “Zaibatsu, Prewar and Zaibatsu, Postwar,” Journal of Asian Studies, XXIII (August, 1964)Google Scholar.

² To the writer's knowledge, there exists no standard or authoritative biography on Iwasaki. A partial list of works consulted follows: Nankai, Gyojin, Iwasaki Yataro (Shoheirō, 1898)Google Scholar; Iida, Tadao, Iwasaki Yataro (Hakuyō-sha, 1937)Google Scholar; Shiroyanagi, Shūko, Nippon Kaium no Kensetsu-sha, Iwasaki Yataro (The Builder of Japanese Shipping, Yataro Iwasaki) (Chōbunkaku, 1942)Google Scholar; Tanaka, Sōogoro, Iwasaki Yataro Den (A Biography of Yataro Iwasaki) (Tōyōshokan, 1955)Google Scholar; Tsuchiya, Takeo, Zaibatsu o Kizuita Hitobito (The Zaibatsu Builders) (Kōbundo, 1955)Google Scholar; Tsuchiya, Takeo, Nippon Shihonshugi no Keieishiteki Kenkyu (A Business History Study on Japanese Capitalism) (Mimizushobō, 1954)Google Scholar; Japan Economic History Association, Kindai Nihon Jimbutsu Keizaishi (A Biographical Economic History of Modern Japan) (Tōyō Keizai, 1955)Google Scholar; Iwai, Ryotarō, Mitsui-Mitsubishi Monogatari (Stories of Mitsui and Mitsubishi) (Chigura-shobō, 1934)Google Scholar; Iwai, Ryotarō, Mitsubishi “Konzem” Dokuhon (A Reader in Mitsubishi “Konzern”) (Shunjyūsha, 1938)Google Scholar; Sakada, Yoshio, Shikon Shōsai (The Samurai Spirit and the Business Talent) (Miraisha, 1964)Google Scholar; Shiroyanagi, Shūko, Zaikai Taiheiki (A History of the Tranquil World of Finance) (Sharashobō, 1947)Google Scholar; Yamaji, Aizan, Gendai Kinkenshi (A History of Modern Economic Power) (Hattorishobō, 1908)Google Scholar; The Bank of Mitsubishi, Mitsubishi Ginko-shi (A History of the Mitsubishi Bank) (The Mitsubishi Bank, 1954)Google Scholar; and Kajinishi, Mitsuhaya, Seishō (The Political Merchants) (Chikuma-shobō, 1963)Google Scholar.

³ The exact assessment of the financial standing of the Iwasaki family differs by source from those who consider it “as that of a comfortable peasant” to those who rank it “as at the level of mizunomi-hyakushō (water-drinking farmer, i. e., a barely subsisting peasant). Tanaka's, SōgorōYataro Iwasaki (Chigurashobō, 1940)Google Scholar has a detailed examination of earlier assessments of Iwasaki's economic status and he leaned toward the “comfortable peasant” standing, 18–23.

⁴ Tosa-han (the present Kōchi Prefecture) is located on the northern half of Shikoku, the smallest of the four main islands of Japan. A han is a feudal geographical unit of administration controlled by a daimyo (feudal lord).

⁵ The following from E. H. Norman may be useful in providing background. Norman wrote: “Tokugawa feudalism dates from the early 17th century when Tokugawa Ieyasu established the hegemony of his family and its collaterals over a large part of Japan and exerted indirect control throughout the three great islands of Honshu, Kyushu and Shikoku. Ieyasu (1542–1616) set up the last in a series of Shogunates, or hereditary military dictatorships, whereby the greatest feudal family exercised political power while regulating the Emperor and court — with suitable euphemisms of veneration and obedience — to the obscurity of a cloistered life in Kyoto.” Norman, E. H., Japan's Emergence as a Modern State (The Institute of Pacific Relations, 1949), 11Google Scholar.

⁶ Though the status of goshi differed from han to han, it was possible during the Tokugawa era for peasants to buy this marginal samurai status. The buying of goshi status had become a nation-wide practice by the end of the Tokugawa era. Though the price of a goshi title fluctuated over time and differed by han, it may be assumed that, on the average, the price was about 200 ryo to become a goshi entitled to use a surname, 500 ryo to wear a sword, and 1,000 ryo to be entitled to both. The goshi status was especially valuable in Tosa and Satsuma han because these han treated goshi as bona fide samurai while in other han this was not necessarily true. See footnote 16 for a description of ryo (a monetary unit). This information was researched for me by Professor Kazuo Noda of St. Paul's (Rikkyo) University, Japan. His assistance is gratefully acknowledged.

⁷ All daimyo were required to live in Edo in alternate years under the Tokugawa system known as sankin kōtai (alternate residence).

⁸ The real reason was political. The conservatives of the Tosa-han were anxious to discredit Yoshida during these years of an unsteady power struggle between pro-Shogun conservatives and anti-Shogun liberals.

⁹ Yoshida's view must be considered with the fact that Japan maintained a seclusion policy during the Tokugawa era.

¹⁰ See footnote 18.

¹¹ Iwasaki was wise in choosing this course because a few months after he had returned to Tosa, one Inoue who accompanied Iwasaki on this mission and took his duty seriously turned up as a corpse in Osaka, apparently murdered by the assassins of Yoshida. A writer offers his hindsight as follows: “At this time [when assassinations and dangerous revenge missions were common] Yataro sensed a danger to his life. He wanted to live, and he must have surmised that it was foolish and anachronistic to avenge the assassins of his benefactor by risking his own life. Moreover, when he saw the active commerce in Osaka, he was a changed man. Now he wanted to be a rich merchant rather than a samurai.” Iwai, Stories of Mitsui and Mitsubishi, 238.

¹² As the han controlled the supply of lumber and Iwasaki was in no position to expect the support of han officials in charge of the lumber business, no information is available as to why he chose this vocation.

¹³ This is a loose translation. A more literal translation of Kaiseikan would be “A Building to Open and to Grow,” that is, to open new trades and to grow economically.

¹⁴ As the lowest-ranking employee of the Agency, Iwasaki was forced to sit at the end of the table when meetings were held, and he was neither expected nor allowed to venture his opinions even if he so wished. Tanaka, op. cit., 60.

¹⁵ A Japanese phrase, chinamagusai kaze, is often used to depict these years when assassinations, uprisings, riots and the berserk actions of frustrated samurai were common.

¹⁶ Ryo was a unit of money which preceded yen. In the early years of Meiji ryo and yen were used interchangeably, though the former was valued slightly higher than the latter at the time of official readjustment in 1868 (1 ryo – 1.0832 yen). Takagaki, Torajirō, Kindai Nippon Kinjūshi (Financial History of Modern Japan) (Local Banks' Association, Monographs in Banking, No. 20, 1955), 80Google Scholar. Also one yen was the equivalent of one dollar before the post-Restoration inflation set in. Ibid., 79. This was the reason “dollar” was used interchangeably with “yen” when involving transactions with foreigners as we will shortly see in the text.

¹⁷ The sources report an incident which is a revealing aspect of Iwasaki's character. When the han population began to demand conversion of these han-notes into specie, Iwasaki set out to assure the populace by converting a small part of the outstanding notes. However, the demand for conversion far exceeded the cash Iwasaki hoped would be adequate to establish confidence in the han-notes. Iwasaki fled literally by night from Tosa to Osaka, and to stop those who were prepared to follow him there by crossing the inland sea, he circulated a rumor to the effect that pirates were rampant on the inland sea. The han officials also cooperated with Iwasaki by suggesting that deadly diseases were raging in Osaka.

¹⁸ As will shortly be noted in the text, Iwasaki had an accountant's mind for precision and detail along with his risk-taking and “wheeler-dealer” nature. This is seen in the fact that he kept a diary all through his life and by what he wrote in it. However, this was more of a log of daily events than a diary, and consisted mainly of notes on the weather, whom he met, what he ate, where he went, etc., Tanaka, who made use of only a few entries in Iwasaki's diary, quoted such items as “today is fair. Entertained Olds [the American from whom he borrowed 300,000 ryo — the spelling of his name in English is the writer's transliteration], two of his servants and two women for four hours,” and “Fair, handed 350 boxes of naphtha to Olds. Mr. Ishimoto witnessed it.” Tanaka, Iwasaki Yataro, 81–82. Another source wrote: “To borrow 300,000 ryo, Iwasaki was prepared to use any means. Olds was invited frequently to a geisha house — Matsuo, the interpreter, was promised 300 ryo as a commission.” Shiroyanagi, Iwasaki Yataro, 178. Sources agree that Iwasaki engineered a scheme to antagonize the English firm from which he had borrowed 200,000 ryo earlier so that the Englishman's naphtha monopoly could be transferred to the American. This scheme resulted in the suicide of one of Iwasaki's cousins who was reported to have been unable to bear the burden of the knowledge of the deed and the staggering amount of the debt involved.

¹⁹ Haihan-Chiken means “Abolition of Han and Establishment of Ken.” A ken was the new prefectural unit of administration.

²⁰ Sources disagree widely on the cash payment made to Iwasaki by the han and the worth of the han business to him. The writer decided to follow what appears to him a common denominator of evaluations on this transaction. The cash amount of 230,000 ryo was said to have consisted of 160,000 ryo obtained by selling the han's naphtha and 70,000 ryo diverted from the former han “navy.” Michio Hirao's Tosa-han Kogyō Keizeishi (The History of Industrial Economy of Tosa-han) (Kochi City Municipal Library, 1957) is informative on the early development of Tosa-han's enterprises, and Yasuzō Hone's “Meiji shonen no Shohan no Shōsha” (“Trading Companies of Several Han in the Early Meiji Period”), Kyoto University Economic Journal, vol. 53, no. 1 (1931)Google Scholar, is useful for a comparative view on han business in general. However, neither is helpful in establishing a more accurate financial value of these han enterprises which Iwasaki acquired.

²¹ Though it cannot be detailed here, the belief of some authors that Iwasaki obtained an exceedingly good bargain in this transaction is highly questionable. The writer leans toward the view that Iwasaki's managerial skill and his successful competitive activities enabled him to use this transaction as his foundation. One should not of course underrate the strategic importance of such a foundation in the hands of a man like Iwasaki during this period.

²² A typical method employed by Iwasaki was to exploit the lack of knowledge of former han officials who were anxious to dispose of han ships, and to use to the fullest his knowledge of business practices of foreign merchants against those who were otherwise competent. As an example of the unscrupulous practices indulged in by Iwasaki, the following is revealing. Iwasaki sold one of his ships to a former han treasurer who was unaware that the ship was unseaworthy. The treasurer paid Iwasaki and took the ship for a test run. The ship's engine exploded no sooner than the ship was out of the bay. Iwasaki, however, refused to return the payment in spite of the pleadings of the poor treasurer who had lost his former daimyo's money. Tanaka, op. cit., 114–15.

²³ Speculations in numerous types of currencies were rife during this period. Much of the wealth on which the Yasuda Zaibatsu was founded had also come from this source. Iwasaki was certainly in a position to know of the redemption ahead of other holders of the han-notes by virtue of his close connection with former han officials who were in the new government. The biographies often cite a rich rice merchant who financed Iwasaki's operation — reportedly involving a sum of 100,000 yen — in exchange for a share in the profits. See for example Shiroyanagi, op. cit., 173–74.

²⁴ Aizan Yamaji wrote in 1908 that “The relationship between Mitsubishi and the Meiji government was not that of the protector and the protected. However small the company [Mitsubishi] might have been, it was an enemy and stood against the government. The government wished to eliminate foreign shippers from coastal shipping, but not by means of encouraging Mitsubishi. The government favored Yubin Kisen Kaisha, and for the government, Mitsubishi did not exist.” Aizan Yamaji, History of Modem Economic Power, 123.

²⁵ By this time Iwasaki must have added some steamships to his original holding of the six steamships obtained from Tosa-han. Though sources differ on the exact number added by Iwasaki, they agree that Iwasaki's ships were older and fewer than those of his rival. Shiroyanagi wrote, for example, that “Iwasaki released a long sigh when he saw ‘Hiroshima-Maru’ of Steamship Mail. The ‘Hiroshima-Marui’ though an old-fashioned boat by today's standard, was far superior to any of Iwasaki's steamships.” Shiroyanagi, The Builder of Japanese Shipping, 203.

²⁶ Aizan Yamaji, History of Modern Economic Power, 123.

²⁷ Takeo Tsuchiya, Zaibatsti Builders, 68.

²⁸ This is an excerpt of a government decree issued by the office of the Privy-Councillor. Steamship Mail's “advertisement” was apparently handled by the government. Quoted in Ryotaro Iwai, Stories of Mitsui and Mitsubishi, 257.

²⁹ Shiroyanagi, Builder of Japanese Shipping, 203.

³⁰ Tanaka, Iwasaki Yataro, 153. Tanaka also cites the following often-quoted incident: “Ishikawa, a former samurai (who became an important officer of the Mitsubishi Zaibatsu later), was often sent by Iwasaki to customers. To do so, Ishikawa had to wear a happi (an abbreviated kimono) with a large Mitsubishi trade mark on its back. Ishikawa felt his heart and soul were shamed by this sort of thing. [Upon learning this] Iwasaki told Ishikawa that all is done for money and that, when Ishikawa again felt ashamed, he was to see a fan which Iwasaki intended to give him. Then Iwasaki gave him a fan on which a gold coin was pasted.”

³¹ The condescending attitude of government officials was common during the Meiji era because many impoverished samurai competed for government positions. A popular jingle during this period — “If a moustache makes one a proud bureaucrat, cats and dogs qualify” — indicates the popular feeling of the time towards the bureaucrats. See Shimbun, Yomiuri (ed.), Meiji Ishin (Meiji Restoration) (Yomiuri Shimbun, 1965), X, 254–55Google Scholar.

³² Ibid., 258–63.

³³ The question of whether or not to invade Korea reflected a deep-rooted division of political philosophy. For an excellent background, see Norman, op. cit., 85–88.

³⁴ Upon retiring from public life, he became an active adviser to the Mitsui Zaibatsu.

³⁵ Shiroyanagi, Builder of Japanese Shipping, 216.

³⁶ Some writers noted that a sizable quantity of material disappeared at the conclusion of the expedition, perhaps with the tacit consent of leading government officials. Iwasaki's gain from this is considered as large as that resulting from the contract.

³⁷ The total expenditure of the government was 7,700,000 yen. The indemnity received from China was 780,000 yen. The cost of the expedition was, therefore, 6,900,000 yen plus 573 lives lost.

³⁸ Shiroyanagi, Builder of Japanese Shipping, 218–22, is most detailed on the nature of the Decree.

³⁹ Ryōtaro Iwai, Reader in Mitsubishi “Konzem,” 86.

⁴⁰ Tanaka estimated the monthly loss incurred by Iwasaki as a result of this competition at 20,000 yen. Tanaka, Iwasaki Yataro, 188.

⁴¹ Ibid., 206.

⁴² This was a rebellion led by Takamori Saigō of Satsuma-han in Kyushu, which is the southernmost island of Japan. The main cause of this rebellion, among others, is considered to be the resentment of the samurai class of the compulsory commutation of their pensions.

⁴³ After a detailed examination, Takana estimated the total profit to Iwasaki from this Rebellion to be about 1,400,000 yen. Ibid., 211. The effective rate of interest was zero because of the government's failure to consider the post-Rebellion inflation which had begun by the time the loan was made.

⁴⁴ Because Japanese gold was undervalued vis-à-vis silver, a large quantity of Mexican silver dollars, which came via Hong Kong, was circulating in Japan.

⁴⁵ Several sources confirm that Iwasaki employed a few individuals to “leak” his “confidential knowledge” that Shibusawa was attempting to establish the new shipping firm in order to default shareholders. This according to Iwasaki was Shibusawa's effort to recover losses he had suffered in his bank. The charge was entirely unfounded.

⁴⁶ These quotes are from Tokyo Keizai Zasshi, November 14 and 15, 1881. The writer wishes to thank the Research Bureau of Nihon Yusen Kabushiki-kaisha (N.Y.K.) which made Kaiun Shiryō (Historical Materials on Sea Transport) — a three-volume compilation of newspaper articles of the period — available to him.

⁴⁷ To a large extent, this affair was politically motivated. See Norman, op. cit., 177–80.

⁴⁸ Tokyo Keizai Zasshi, November 15, 1881.

⁴⁹ Ibid., December 11, 1881.

⁵⁰ Shiroyanagi wrote: “On the podium were paper models of ships, and an effigy of a sea monster made of straw. Speakers castigated the evils of Mitsubishi. When a succession of orators had succeeded in arousing the feelings of the audience, the paper ships and the effigy were burnt in the midst of the yelling crowd.” Shiroyanagi, Iwasaki Yatarot 294.

⁵¹ This is known as Jūyonnen no Seihen (The Political Affair of 1881) which began by the exposure of large-scale corruption in the office of the governor (Kaitakusi) of Hokkaido. Okuma was linked to this corruption. For more background, see Norman, op. cit., 176–80.

⁵² Tanaka notes scores of small accidents and six major accidents (ships involved either sank or were rendered unseaworthy) between July 1882 and October 1884. Tanaka, Iwasaki Yataro, 311.

⁵³ Total passenger revenue of Mitsubishi decreased from 4,415,608 yen in 1882 to 3,304,501 yen in 1883, and in 1884, at the height of the competition, it declined to 2,608980 yen. Ibid., 309. Although in discussing these data contained in this sentence and the preceding paragraph one must keep in mind that this was the period of the so-called Matsukata inflation, the size of the losses and the decline in rates could hardly be charged to the deflation. Compared to the sharp fall of price indexes noted during the 1881–1883 period, in the years between 1883 and 1886 the wholesale price index fluctuated within the range of 123 to 132 (164 in 1881 and 100 in 1877). Rosovsky, Henry, “Japan's Transition to Economic Growth, 1868–1885,” in Rosovsky, H., ed., Industrialization in Two Systems (Wiley, 1966), 113Google Scholar.

⁵⁴ Ibid., 250–351.

⁵⁵ Iwai, a colorful writer, went on to write that “… of all things, the strongest impression to be gained from Yataro's characteristics is that he was the possessor of a cruel heart. There are many qualifications required of a good capitalist, but nothing is more important than having a cruel and cold heart. Yataro, in this regard, was amply qualified.” Iwai, Stories of Mitsui and Mitsubishi, 237.

⁵⁶ One incident often quoted is illustrative. Iwasaki one day found an employee using company stationery for his personal use. He promptly fined the employee 15 yen, which was the equivalent of 25 per cent of his monthly income. However, two months later Iwasaki raised the employee's salary by 30 yen.

⁵⁷ Tanaka's evaluation is quite typical: “Okuma in politics, Fukuzawa in ideologies, and Iwasaki in business” were “three who represented the Meiji era in the 1880's.” Tanaka, Iwasaki Yataro, 3. Of the four Zaibatsu, two (Mitsui and Sumitomo) have long histories dating before 1868. Yasuda and Iwasaki, on the other hand, built their respective financial empires after 1868. Comparing the two, Iwasaki's empire was much larger than Yasuda's. In short, Iwasaki was the most successful entrepreneur of the early Meiji period.

⁵⁸ Ranis, Gustav, “The Community-Centered Entrepreneur in Japanese Development,” Explorations in Entrepreneurial History, VIII (1955), 81Google Scholar.

⁵⁹ Hirschmeier, Johannes, The Origins of Entrepreneurship in Meiji Japan (Cambridge, Mass., 1964), 222CrossRefGoogle Scholar.

⁶⁰ Ibid., 223.

⁶¹ Shōin Yoshida (1830–1859) was a samurai of Chōshū-han. (Hirschmeier follows the Japanese custom of putting the last name first). Besides the fact that he was a strong nationalist who came to support the Meiji Restoration, it is difficult to evaluate his precise views on the shogunate and what he called “the Japanese spirit of samurai.” His views changed as the political situation in his last years changed rapidly. He was executed for his attempt to board a Russian ship as Japanese were prohibited from leaving Japan under the Shogun regime. Yomiuri Shimbun, History of Japan, 59, 99.

⁶² Shōin Yoshida was in prison after 1854 until his death in 1859. Iwasaki did not come to Edo until 1854 and the visit was a brief one, as seen in the text.

⁶³ Hirschmeier finds that “it is difficult to assess the relative strength of his two predominant motives, his drive for power and patriotic idealism,” though he notes that “Iwasaki's ruthless monopoly practices and his enormous profits created enemies in the government.” Readers are left to wonder why Hirschmeier found it difficult to assess the relative strength of these two motives as no discussion or “evidence” of Iwasaki's patriotism is presented except for Iwasaki's words on his deathbed — “Do not engage in speculation. Do business with a patriotic attitude.” Hirschmeier, op. cit., 222–24. This is one of the many deathbed statements attributed to Iwasaki. A few sources are rich in these. Several sources cite different versions of this last remark by Iwasaki and they range from a long discourse on the virtues and meanings of good entrepreneurship to the exclamation that “I am a man of the Far East” which is supposed to mean that he was conscious of the Western influence on Japan to the last moment of his life. Shiroyanagi, op. cit., 311.

⁶⁴ In reviewing Hirschmeier's book, Yui raises this point, saying that “… at the end of the Tokugawa period, one finds rich peasants and small-scale entrepreneurs in villages who began to have thoughts and an education akin to those possessed by the samurai class, and the class distinction between the lower class samurai [and those mentioned earlier] became thin [hard to distinguish].” Yui, Tsunehiko, “On the Entrepreneurship in Meiji Japan by J. Hirschmeier,” Japan Business History Review, I, No. 2 (September, 1966), 105–106Google Scholar. Also, see Yui's review of Hirschmeier in Business History Review, XXXIX (Summer, 1965), 283–85Google Scholar.

⁶⁵ In the circumspect phrasing common in Japanese academic writing, Nakagawa, though he shares “with Ranis and Hirschmeier the feeling that the Meiji entrepreneurship can hardly be explained just by the notion of homo economicus,” commented that “we cannot assume, of course, that the Meiji entrepreneurs were virtuous men by nature and regarded social gain more important than private profits. Of course I do not deny that the Confucian ideology was to some extent responsible for making them fairly conscious of social welfare.” Nakagawa, Keiichiro, “Organized Entrepreneurship in the Course of Industrialization of Prewar Japan,” International Conference on Economic Growth, September 5–10, 1966, TokyoGoogle Scholar (mimeo).

⁶⁶ Redlich, Fritz, “Business Leadership: Diverse Origin and Variant Form,” Economic Development and Cultural Changes, VI (April 1958), 177CrossRefGoogle Scholar.

⁶⁷ In the source cited in footnote 65, Nakagawa attempts — for the first time in this writer's knowledge — such an analysis of the Japanese entrepreneurial activities of the Meiji era by using the case of the joint efforts of the textile industry and the shipping companies to combat foreign competition. This is an excellent article for those who are interested in the development of Japanese general merchants (sōgō-shōsha) which is a unique feature of Japanese business organization.

⁶⁸ See for example Buchanan, N. S. and Ellis, H. S., Approaches to Economic Development (New York, 1955), 118Google Scholar.

⁶⁹ Kojima, Toshio, Sangyō-shi (A History of Industries) (Yamakawa Shuppansha, 1966), 150Google Scholar.

⁷⁰ Tsuchiya, Zaibatsu Builders, 67.

⁷¹ Professor Rosovsky describes the institutional changes which were vital for the economic development of Japan of the Meiji government. However, unlike many other available sources on the early Meiji period, he is careful to note that “it [the period of transition from 1868 to 1885] was not the end of confusion, disputes, vacillations, and temporary setbacks, but it was the beginning of the end.” Rosovsky, op. cit., 113.

⁷² Though it cannot be elaborated here, the observation that Iwasaki's activities and motivations are typical rather than atypical is based on the writer's judgment after reading through nearly 200 biographies of the Meiji entrepreneurs.

⁷³ See the articles by Mitsuhaya Kajinishi who, on the basis of detailed case studies, questions rather fundamentally the generalization that the government was the prime mover even in these industries. Kajinishi, M., “Meiji shorten no Sangyo-shihon” (“Industrial Capital in the Early Meiji Period”) Shakai-Keizai Shigaku (Journal of Social and Economic History), XXV (1959)Google Scholar and “Shokusan Kogyo Seisaku to Sangyōshihon no Seisei” (“The Industry Promotion Policy and Formation of Industrial Capital”), Keizai Kenkyū (Research in Economics), IX (1958)Google Scholar.

⁷⁴ The term “transition” is used in the sense Rosovsky used it. See footnote 71.