KOBE ECONOMIC & BUSINESS REVIEW No.6

ECONOMICBUSINESS & 6th ANNUAL REPORT QssSVTE'ltoe g`i ,IIEil :-'` e" THE RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATION KOBE UNIVERSITY I959 Copyright, 1959, by The Research Institute for Economies and Business Adrninistration, The Kobe University KOBE ECONOMICBUSINESS & REVIEW 6th ANNUALREPORT 4"Vli.lt% '9eqI8ii.:eS THE RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATION KOBE UNIVERSITY 1959 CONTENTS Page History of Yen Its Developments in the Japanese Economy (2)••••••••••••••••••••--•-••••••••••••••••••Hiroshi SmNJo -• 1 The Central Banking Policy in the Meiji Era••••••••••••••••••••• Masahiro FuJITA -• 19 Economic Growth, Balance of Payment and Capital Movement•••••••--•-••••-•-•••--••-••---••••-•-----•••••• Hikoji KA'rANo ••• 29 World Trade and Japan's Export 1953-1957. •••••••••••• Fukuo KAwA'rA ••• 41 AIguns Aspectos da Mobilidade de Japoneses no Brasil•••••••••••••••Hiroshi SAiTo ••• 49 Problems of Emigrant-Transportation in Japan••-••--•••••••• Hiromasa YAMAMoTo ••• 61 Port Labor Conditions in Japan Particularly in Kobe Port ••••••••-••••-•••••••••••••••• Ginjiro SHIBATA ••• 75 The Development of the Concept "Operator" in Japan•••••••--••--•• Seiji SAsAI<I -•- 91 Single Industry Towns in Japan•••-••••••••••••••-•••-••••-••••--•--•-••••••Minoru BEii<A •-• 103 On the Application of the Social Accounting Principle to Business Accounting••-••-•••••••••••-••••••••••••••••••••• Nobuko NosE •-111 Valuation of Work in Process••••••••-•-•••••••••••••••••••••••••••• Susumu WATANABE •- 119 Developmental Stag'es Relating to Theories of Stock-Equity Accounting•-•••••-•••••••-•••-•••-•••••••••••••••••••-•Ryuji TAi<EDA ny•• 129 On the Rate of Interest in Business Administration•••-•••••••••••••••••--••••Jiro ONo -• 137 Various Classes of Data Processing by Means of Electronic Computer•••••••••••••-•-•••-•--••-•••••••••-••••••••••••--- Hideo KiTANI --- 149 Company Histories in Japan Materials for Business History ..•...•.•--•ny••••-•••••-•••••••••••••-•••••-• Tadakatsu INouE and Yoshiro Ii<usHiMA ••• 157 HISTORY OF YEN ITSDEVELOPMENTS IN THE JAPANESE ECONOMY (2) Hiroshi SHiNJo 6 The history ofmoney in every country might well be said to be the history ofits depreciation. The yen is not an exception, rather it might be called a typical ex- ample. Roughly observed, the index of prices starting from 1873 (Meiji 6) as 100 goes up to 240 in 1911 (Meiji 44) as the clDse of Meiji, to 514 in 1925 (Taisho 14) at the close ofTaisho and to over 140,OOO, near the end ofthe 1950s. That is to say, the value of the yen has declined to about lf1500 of its original value in about 80 years. It is important to add that the major part ofthis depreciation was experienc- ed during the inflation caused by wars-especially the last war. The price of gold which was oMcially fixed in 1871 as 1 Yen per 1.5 grams (O.4 Momme) fine gold, was doubled in 1897 and 1 Yen represented 750 miligram of fine gold. After many revisions the oMcial price of 1 gram of fine gold was fixed at \405, the magnification of which exceeds 600. Money is, as is well known, a standard measure ofvalue and prices for all commodities, but money itselfis changeable in value and it has really never been a simple neutral measure ofvalue and prices. As a matter of fact, money has never been a sheer veil ofeconomy. In some cases, the value ofmoney was changed conscious- ly and in other cases was obliged to be changed indifferent of the will of the government. To know what the value of the money of one country should be, therefore, is an intelligence of vital importance in modern life. Now, when the units of an economy exist independently without having an exchange system as in the past, there needs to be no common means of exchange, and there may exist different kinds ofmoney made ofdifferent materials at the same 1 2 HIROSHI SHINJO time. But as export and import begin to be carried on a world-wide scale and the world itself is deemed to be one market including all countries, there should exist only one kind money which all countries have in common. Gold has been fixed as this "money of the world." As we have already seen, when Japan wanted to trade with other countries at the beginning of Meiji, the international gold standard had been almost completed and the adoptation of the same standard was a prerequisite. Of course, each governments is free to decide what price should be fixed for a certain weight and fineness of gold, and as a matter of course the price ofgold has been fixed by governments proper to their own economy with denomina- tions of their own. As a result the mint parity or oMcial rates of exchange are fixed in all countries, and so the depreciation of money is expressed primarily by the price of gold and exchange rates for foreign currencies. It is well known that so Iong as the convertible bank notes system is maintained the rates of exchange among countries never change beyond so called "gold points." The rates of exchange of the yen under the gold standard system form 1897 to 1917 was therefore very stable as shown below. Table X. Foreign Exchanges 1897-l917. Against London Against New York Wholesale Price Index (average) Highest Lowest Highest Lowest 1898 2s,O.42d 2s.O.16d $49.45 $48.82 1899 2 O,8 2 9.4 50.00 49.47 1900 2 O.4 2 O.3 49.51 49.25 100 1901 2 O.5 2 O.3 49.74 49.25 96 1902 2 O.8 2 O.3 50.13 49.50 97 1903 2 O.7 2 O.4 50.01 49.35 103 1904 2 O.4 2 O.1 49.42 48.76 108 1905 2 O.6 2 O.3 49.80 49.25 116 1906 2 O.5 2 O.4 49.63 49.38 120 1907 2 O.5 2 O.4 49.75 49.38 129 1908 2 O.5 2 O.4 49.57 49.42 125 1909 2 O.6 2 O.5 49.75 49.57 119 1910 2 O.4 2 O.4 49.64 49.42 120 1911 2 O.5 2 O.4 49.50 49.44 125 1912 2 O.6 2 O.4 49.73 49.48 132 1913 2 O.9 2 O.3 49.74 49.33 132 1914 2 O.4 2 O.1 49.63 49.13 126 1915 2 1.3 2 O.2 49.66 48.62 128 1916 2 1.6 2 O.2 50.50 49.88 155 1917 2 1.8 2 1.6 51.00 50.50 195 HISTORYOF YEN 3 Though under the gold standard system the rates of exchange are stable, the prices of commodities cannot be stabilized. They fluctuate and change according to business cycles. But when prices rise because of increasing imports and when they fall through increasing exports, a counterbalancing power automatically rises and the gold standard system is the best stabilizer of prices in the long run, though the price index numbers shown above might betray this expectation. But there will be no doubt if we compare these numbers with those in later suspension years. And the fact that international trade was impossible to be carried on freely during the war because of the risks oftransportation by sea must also be taken into consider- tion. During the lst World War, Japan next to the United States enjoyed the profits of the war to the fu11, and was favored with an unprecedented balancc of payment. However, looking back over the years from the Russo-Japanese War to the outbreak of the World War I the scale of foreign trade has been enlarged, imports having increased more sharply than exports, the balance of trade showing a yearly deficit except for 1906 and 1909, and the total deficit during the above period amounting to 582 million yen. Not only the balance of trade, but invisible trade also had a deficit. The total of both deficits would have amounted to nearly 1 billion yen for this period, but for the fact that during this period sizable amounts of foreign capital to cover this deficit was borrowed from abroad. Above all, government loans of 82 million pounds, (about 800 million yen) were raised in London to finance war expenditures in 1904 and 1905. Thus, the specie reserve of the Bank ofJapan was dependent substantially on foreign loans and without such a support even the maintenance of the gold standard system might have been impossible. Just before the outbreak of the World War I, which changed matter completely, Japanese economy was on the verge of bankruptcy, as the political unrest in Europe made the prospect of new foreign loans very diMcult at the time when past debts were falling due. In 1914 and after, Japanese exports increased year after year because Japan was furnishing goods to underdeveloped countries whose source ofsupply by former connections became impossible, and invisible exports by shipping and insurance also increased. The total excess of the balance of trade amounted to 1.333 billion yen and that ofinvisible trade to 1.893 from 1914 to 1919, thus the total ofthe two made 3.226 billion yen. About one-half of this holding was used to replenish exchange holdings abroad and the specie reserve of the Bank ofJapan, about one- tenth to pay back foreign loans and one-third to expend for foreign investments 4 HIROSHI SHINJO by Japan. Thus Japan became a creditor country by the lst World War. But when the War ended, the reaction carne quickly. After reaching the highest peak of2.099 billion yen in l920 exports began to decline sharply to 1.253 billion yen in 1922. By 1919 imports already exceeded exports and the deficit balance of trade for 1920 became 388 mi11ion yen, the largest amount since the beginning of Meiji. In only three years after the War's end, the total deficits amounted to 824 million, almost 60% or 408 million yen of the excess balances gained during the war disappeared.

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