HISTOR¥

Earlier, I referred to the importance of social darwinist and mercantilist semantics coinciding with the early reform movement (around 1868). I also mentioned the attention of the reformers for foreign learning in what they projected as the future pathways of the Japanese state.

Foreign experience most certainly helped the career of Matsukata Masayoshi 松方正義, who was to set the course of Japan’s finance for almost two decades (1881-1897). Of Satsuma stock and trained as an accountant throughout his samurai career, Matsukata had been the governor of a prefecture in Northern Kyūshū; he went to Tōkyō in 1871 to work at the Finance Ministry as deputy head of the tax department. In 1875 he was appointed as secretary and head of his department. At the time, he was in charge of land tax reform, transforming the system based on rice tax into a system based on money tax. In this capacity, he acquired extensive knowledge of financial affairs, and became Japan’s most enlightened financial planner of the nineteenth century.

Matsukata must be credited as the first Japanese policy maker to grasp the meaning and functioning of modern finance. His ideas on banking were given shape in the wake of his appointment to supervise the display of Japanese exhibits at the Paris exhibition to be held in 1878. Matsukata left for Paris in early 1878 as the most distinguished member (Ōkubo Toshimichi 大久保利通, utmost head of government and chairman of the delegation, did not travel to Europe). This European journey proved a formative educational experience. As we will see, Matsukata examined the National Bank of Belgium, which in effect became the model for the Bank of Japan. But Matsukata also witnessed the collapse of the bimetallic Latin Monetary Union. This may very well have made him deeply suspicious of bimetallism. And, most significantly, while in Europe, Matsukata learnt that Germany had successfully based its gold standard upon the French indemnity paid in the aftermath of the Franco-German war (1870-1871) (source: Norio Tamaki, ‘Japan’s Adoption of the Gold Standard and the London Money Market 1881-1903: Matsukata, Nakai and Takahashi’, in Ian Nish (ed.), Britain & Japan –Biographical Portraits (Richmond, Surrey, 1994), pp. 121-132). For us, it must be hard to imagine the impact of this experience. Yet for Matsukata, brought up in a climate of national mobilization, it most certainly reinforced the social-darwinist worldview. Here was a country (Germany) that, by means of warfare, had managed to set into motion a financial revolution! Around the time of Matsukata’s arrival in Europe, the ‘scramble for gold’ had begun (source: Giulio Gallarotti, ‘The Scramble for Gold: Monetary Regime Transformation in the 1870s”. In Michael Bordo & Forrest Capie (eds.), Monetary Regimes in Transition (Cambridge, 1993), pp. 15-67). Matsukata must have looked back at this period of his career when, in 1897, he used the Chinese indemnity after the Sino-Japanese War to bring Japan onto the gold standard. In any case, while in Europe, the plan for the overall financial sanitation of Japan took shape.