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Japanese Industrial Policies in Colonial Taiwan: Tea and Sugar

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Japanese Industrial Policies in Colonial Taiwan: Tea and Sugar Japanese Industrial Policies in Colonial Taiwan: Tea and Sugar Tsong-Min Wu* ªÏ;.m. Tea and sugar were the two most important exports in late Ching. Aer Taiwan became a colony of Japan in ÏÊ, the colonial gov- ernment put a great eòort to develop the two industries. But the growth of the tea and sugar industries took complete diòerent paths. While there was a phenomenal growth in the sugar production and export, the export of Oolong tea to the U.S. was stagnant in the beginning and then declined in late ÏϪs. ais paper analyzes the eòects of the industrial policy of the Japanese colonial gov- ernment, and its implications on the post-colonial development of Taiwan. Taiwan’s exports saw tremendous increase during the Japanese colonial period. At the end of Ïmªs,Export to GDP ratio exceeded ªì. Sugar and rice were the two most important products, both went to Japan. Around the world, export expansion helps raising the GDP level, Taiwan’s high growth beginning in the early ÏEªs has been a well-known example. ae purpose of this paper is to study the export expansion during the Japanese colonial period. One of the factors that helps export expansion was the lowering of trans- portation cost.Hummels (ªª;) analyses the eòect of lower transportation cost on international trade and economic growth. At the end of the Ching *Preliminary.I thank the participants of the Ïth Annual Conference of European As- sociation of Taiwan Studies, Ca’ Forscari University of venice, for their comments. E-mail: [email protected]. Ï % 40 30 Total exports 20 Exports to other countries 10 1903 1908 1913 1918 1923 1928 1933 1938 1943 Figure Ï:Export to GDP Ratio Source: Exports,Chief Executive Oõce of Taiwan (ÏE); GDP, Wu (ªª). dynasty, inland transportation in Taiwan was rather backward. Because of the high transportation cost, only a small amount of the rice produced in Taichung was transported to the Taipei area via ships. ae Japanese colonial government put great eòorts to build a modern transportation system, and the north-south railway ûnished in ÏªÊ was the ûrst milestone. Wu and Lu (ªªÊ) show that aer the railway was built, the regional rice prices converged, and Taiwan be- came an integrated market for the ûrst time. Figure Ï shows Taiwan’s export to GDP ratio from Ϫm to Ï. Taiwan became a colony of Japan in ÏÊ, so total exports were divided into “exports to foreign countries” and “exports to Japan”. During the colonial period, export to GDP saw a upward trend up to the end of Ïmªs, and reached to over ªì in ÏmÊ. However, exports to foreign countries showed a downward trend. In other words, more and more exports went to Japan. In the beginning of the Japanese period, tea and sugar were the two impor- tant exports. Oolong tea was exported to New York, and sugar was shipped to Japan. ais paper will ûrst analyze how exports were helped by the newly de- veloped transportation system. It will be shown that the lowering of the inland transportation cost did not helped much to the tea export. As for sugar industry, new transportation system lowered the inland trans- portation cost, but the real factor behind the growth of the sugar industry was the heavy tariò imposed on sugar imports from other countries. During the colonial time, Taiwan’s cane agriculture and sugar production technology did see tremendous improvement, but comparing with the other cane sugar areas such as Java, Taiwan’s sugar production cost was much higher. In other words, Taiwan did not have comparative advantage in sugar production. ais situa- tion did not change toward the end of the colonial period. Aer Japan was defeated in August Ï, Taiwan was took over by the KMT government. From Ï to Ï, Taiwan’s sugar was exported to Shanghai, and enjoyed the tax-free status. However, the KMT government retreated to Tai- wan in late Ï, and starting Ϫ Taiwan’s sugar had to compete in the inter- national market. With higher production cost than other countries, Taiwan’s sugar industry quickly declined. In the following, section Ï discusses the development of tea industry, sec- tion analyzes the rise and fall of the sugar industry. And ûnally, some con- cluding remarks are provided in section m. 1 Tea Industry Tea was the most important export in the late Ching. In ÏÊ;, the most three important exports were tea, sugar, and camphor, the value of tea export were E,ª,Emª yens, .ì of total exports. ae exports of sugar and camphor were Ï,,ªÏ yens and Ï,mm,m yens respectively, or .Êì and .mì of total ex- ports.Ï Taiwan started to export tea in ÏÊEE, the volume of export was Ïʪ,Ê pounds. In ÏÊ;, tea export increased to ª,m,ª; pounds. In other words, during the thirty years from ÏÊEE to ÏÊ;, the yearly average growth rate of tea exports was ÏE.ì. Davidson (Ϫm) analyzed Taiwan’s tea industry development at the begin- ning of the ªth century, and he held high hope for its potential. Similarly, when the Taiwan Government General conducted extensive industry surveys early in the administration, it also held high hope for the further development of tea industry. For example, in the ûrst issue of Financial Reference Document (《第ø次金¢9á¡5z》) published by the Bank of Taiwan, there was an ap- pendix titled Reports on Taiwan’s Tea Industry. It turned out, however, that the development of tea industry in colonial Tai- ÏDavidson (Ϫm), p. m; Chief Executive Oõce of Taiwan (ÏE), p. ÏÊ. ae ûgures only contain the exports via the newly opened international ports, there were some exports through the traditional ports. But no records le for these ports. m 100,000 90,000 Oolong tea 80,000 70,000 60,000 50,000 40,000 Pouchon tea 30,000 20,000 10,000 Red tea 1896 1901 1906 1911 1916 1921 1926 1931 1936 1941 Figure : Tea Production Unit: Ϫª kg. Source: ©N雯 (ªªm), original source: Taiwan Tea Statis- tics, Ï, pp. Ï, Ï, Ïm, Ï; 善(aÈ,署«灣}署 (ÏE), p. Ê. For Oolong and Pouchong, ÏÊE–Ϫ were weight of export. wan was not as good as expected. Figure shows that Oolong tea production actually declined aer the late ÏϪs. However, there was an upward trend for Pouchong tea up to the late Ϫs, most of which were exported to the South- east countries. Red tea showed rapid increase starting the early Ïmªs. 1.1 Transportation Cost and Trade How the modernization of the transportation system helped the tea industry? In ÏÊ;, E.Ïì of Oolong tea was exported to New York and Chicago, the rest was sent to London. In the retail markets. tea price was mainly determined by quality. Around Ϫm, Oolong tea prices in New York ranged from ª. to ª.;ªª dollar per ounce. For the Finest grade, the price was ª.mª–ª.mʪ per pound.m Converted to the Taiwanese unit, this was equivalent to .m–ª.; Taiwan dollar per Eª kg, ae average price was Ê.ª Taiwan dollar per Eª kg. ae production of Oolong tea can be divided into two stages: crude tea and reûned tea. Taiwan’s tea tree was grown in northern Taiwan including Taipei and Taoyuan. In Ϫª, Taoyuan county (>ú&) was the most important area producing m.ì of the total tea leaf exported. Shih-Dean county (ù碇&) ranked the second, and Bai-Jai county (擺Q&), and Wen-San county (d山 &) ranked the third and the fourth. Aer fresh tea leaf was picked, it was im- m@vC灣HU|查} (Ϫ), vol. Ï, p. ÏϪ. For tea quality grade system of Oolong tea, see Ukers (Ïm), p. m. @vC灣HU|查會 (Ϫ), vol. Ï, pp. E–Em. mediately processed to become crude tea locally, and then sent to Dadaocheng (大稻埕) to reûne. At the beginning of the ªth century, crude tea seasons started in April and ended in October.Out of the yearly output, Spring tea took the biggest share of ªì, Summer and Fall tea had ªì each, and Winter tea had only Ϫì. ae best quality came in Summer, and the price was the highest. According a survey in Ϫm, the price of Average Grade crude tea was Ê.ª Taiwan dollar per Eª kg in May, but only Ï. dollar in April.E For the whole year, the weighted average of price was .Ï dollar per Eª kg. Reûned Oolong tea was produced in Dadaocheng and then sent to Tamshui. From there, it was shipped to Amoy, and ûnally to New York. An alternative route was from Amoy to the west coast of the US., and then transported to Chicago. At the beginning of the Japanese colonial period, a new shipping route was created. Oolong tea was sent from Dadaocheng to Keelung, and then shipped to Japan’s Kobei, and ûnally to New York or Chicago via the Pa- ciûc Ocean route. ae shipping cost diòerence of the new and the original lines was marginal, however. For overseas shipping cost from Keelung to the west coast of the U.S. was almost the same as the route from Tamshui.; Table Ï shows Oolong tea’s transaction price at the various stages from the crude tea in the mountain side to the retail market in New York. For example, the shipping cost from Amoy to New York (including insurance) was .Eª US dollar per Eª kg, or ÏÏ.mì of the retail price of mÊ.Ê dollar in New York.
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