Figure 1.--Along with merchant freighters, Japan also built passenger liners which were important in the time before international air travel. One of these was the 'Ginyo Maru' built after World War I (1920-21). A serious accident occurred (1925). The press caption read,"When the Ginyo Maru Burned at Sea: Tiny citizens of four different nations are represented in this group of refugees from the burning steamer 'Ginyo Maru' off the coast of Mexico. With Charles Schultz, chief steward of the burned vessel are Chinese, Japanese, Filipino, and Mexican children." While heavily damaged, the 'Ginyo' did not sink as a result of the fire. These liners were a subject of national pride. And during war time were use a troop transports. Because of their speed, they were hard for submarines to sink. The vessel was extensively sued in the Pacific War to move troops. It had reported unsuccessful torpedo attacks, but by late-1943 the U.S. Navy had solved its torpedo problem. It was finally sunk on its way to Mania by the 'USS Flying Fish' (December 16, 1943).

Japan's industrialization required not only rail transport, but maritime transport as well. Japan needed to import raw materials and export its manufactured goods. For this because of its island geography, Japan needed to build a sea-going maritime (maru) fleet. This was some that had to be built up from scratch. The Shogun had cut off Japan from the world economy. Only a few Dutch ships were allowed to call at a single port. The turning point was Commodore Perry Black Ships (1853). The Japanese merchant marine transformed from a primarily coastal and regional fleet to a global force. It began to expand to support Japan's industrial development (late-19th century). Just before the War, a naval historian wrote, "The rise in power and prestige of the Japanese merchant fleet since the advent of the iron ship is a maritime exploit of unparalleled proportions. A single generation ago Japan’s merchant marine consisted of 20 sailing vessels for every steamship and the operation of the fleet was confined principally to the China service and the coastal trade. Today her shipping companies operate vessels on regular runs over the principal sea lanes of the world. Her tramps dot every ocean and compete for cargo in every port of the globe." 【 McCormick 】 Japan lunched the First Sino-Japanese War broke out in 1894 and it was at this time that the Japanese shipping industry made great strides for the fir... The Japanese merchant marine fleet totaled 6.3 million gross tons or about 8 per cent of the world's tonnage when World War II broke out in Europe (1939). It ranked third only after Britain and the United States. This was adequate for an important industrial nation. The problem for Japan was that in war time the need for maritime transport escalates, especially a naval war fought over the vast distances of the Pacific Ocean. With Japanese attack on at Pearl Harbor the country's merchant marine was converted for war-time service, serving as troop transports, delivering arms and and ammunition and other supplies to wide-spread Pacific garrisons. Japan went into a construction frenzy to expand the maru fleet. The Japanese tried to make available Maru tonnage do by ordering garrisons to become self sufficient in food supplies. The result was that large numbers of Japanese military personnel as well as the civilian population in the occupied territories starved. During the Pacific War, the United Sates destroyed some 8 million gross tons of merchant ship tonnage. This was more than Japan began the war with because if the ships built during the War. were lost, including the vessels built during the war. This did not occur in a slow drip by drip process. Ship losses were very limited in 1942 and most of 1943. The Japanese dominated the seas in 1942 and still had a significant presence during 1943. The United States launched unrestricted submarine warfare within hours of Pearl Harbor. The problem was that the Submarine Service was not trained for this and too many of the torpedoes were defective. These problems were not addressed for over a year and half. Once this was addressed, the sin kings escalated and in about a year the maru fleet was largely destroyed. This cut the war factories of the Home islands off from needed raw materials. Japan began the War with a much smaller industrial base than America now had factories cut off from raw materials. And this was before the American strategic bombing campaign had kicked in.

Ancient Japan

Medieval Japan

Tokugawa Shogunate (1603-1868)

The Tokugawa Shogunate cut Japan off from the outside world. The Shogun was disturbed by the unsettling impact of Cristian missionaries on Japan's traditional society, decribed as still a 'closed and ancient land'. But it was a land that was not ruled by the Emperor who while respected, was a spiritual, not a temporal leader. It was the Shogun who ruled -- the Tokugawa dynasty. Tokugawa Ieyasu was the third of the three 'Great Unifiers' of Japan. He was disturbed by the European traders and Christian missionaries (126th century). After seizing power, he mandated a policy of isolation against the expanding Western world as well as China and Korea). The Russians has not yet reached the Far East. Feudalism was not just a European phenomenon. The Tokugawa Shogunate was very much a feudal society. There were few roads which at any rate difficult to construct in Japan's mountainous terrain. Commerce was limited. Industry did not exist even in the final years of the Shogunate (mid-19th century). As the Shogun ordered the country to be isolated, there was very little shipping of any importance. Ieyasu successors confiscated all ships of more (1609). And prohibited the building of vessels larger than 50 tons (1635). For the next 200 years of the Shogunate, only 5 foreign vessels are known to have called in Japanese ports (17th and 18th centuries). Sailors attempting to call at Japanese ports or ship wrecked were executed, not uncommonly in horrible circumstances.

Opening Japan (1840s-60s)

Japan remained closed (until the mid-19th century). China had opened five ports to foreign trade (by 1840). World trade was expanding as reliable steam power had begun to replace sail even to the Far East. But steam power required coal. And this meant the need to establish coaling stations in remote locations. Britain led this process, bu America was also involved. The United States was a very new country, but America had something the Europeans did not. Building a ship required huge quantities of wood. While Sherwood Forest had long disappeared, America had endless virgin forests. Thus the United States ha an important merchant fleet. Even at th time of the Revolution (1776), America had a merchant fleet. American vessels might be rough hewed, but they could be inexpensively built and were sturdy. By the mid-19th century, American shipping could compete with British in the Clipper Ship trade. And Americans were operating whalers in the North Pacific. Sailors shipwrecked on the Japanese coast continued to be treated with the upmost severity. Americans and Europeans also anted to commence trade with Japan. The Tokugawa Shogunate had imposed peace and tranquility on Japan, but not economic growth and modern science and technology. The population was suppressed like medieval peasants. All of this mean that Japan like China had fallen behind the West in military technology. Japan was not completely isolated. There were some Japanese that wanted modernity and change. The Dutch were allowed a limited trade through Nagasaki. Christianity had been brutally suppressed. Buddhism still existed, but Shintoism was growing in popularity and focused on the Emperor rather than the powerful Shogun. President Millard Fillmore sent Commodore Matthew Perry to Japan to open the country and retrieve ship-wrecked American sailors and whalers. Commodore Perry and his Black Ships anchored in Tokyo Bay (1853). This led to a treaty and Japanese concessions. This was also a traumatic shock to the Japanese. The Shogun's authority was substantially weakened. Feudalism began to give way to hyper-nationaiism. Japan after opening its ports to the Western maritime powers began to encounter the same problems China was experiencing that led to the Opium Wars. Other countries demanded access to Japan. Inevitably this led to incidents The British were particularly active. A member of the Satsuma clan killed a British merchant (1862). The British responded forcefully and punished the clan, one of the most powerful in Japan. hey demanded an indemnity. Choshu clansmen fired on European passing through the Shimonoseki Straits. A combined European (British, French, and Dutch) shelled the settlements Straits and forced the Japanese to pay an indemnity. Japanese society began a dramatic period of change that would lead to the Meiji Restoration (1870s). Ironically, he next period of dramatic change would begin when the Americans returned after dropping two atomic bombs and Japan's defeat in the Pacific War (1945). Throughout this period, it was Western merchant vessels coming to Japan. Japan had no modern merchant (maru) fleet.

Meiji-Restoration (1868)

The Western incursions had a profound impact on the proud Japanese. And they could not but fail to take note of what the Western maritime powers were doing in China. And the declining Shogunate without a modern military was unable to respond effectively, meaning what was happening in China would inevitably occur in Japan. It became clear that the Shogunate could not effectively conduct foreign policy and deal with the Europeans. This impacted the prestige of the Shogunate and inevitably its authority. It was increasingly seen as impotent. The Satsuma and Choshu clans organized a revolt (1868). Armed conflict occurred. Very quickly the lords of Satsuma, Choshu, Hizen, Tosa, as well as other clans issued an edict in the name of the Emperor -- Mutsuhito who was still a boy. The edict abolished the Shogunate was established the Emperor s the country's temporal ruler. This returned Japan to what was seen as the county's ancient form. Mutsuhito was the 122nd emperor in an unbroken line. He designate his reign as Meiji, or era of enlightened government. This proved to be an accurate designation. It was during the lengthy Meiji Reign (1868-1912) that Japan sprang from a backward feudal society to Asia's first industrial power. The new Meiji government was faced with the daunting task of modernizing virtually every aspect of Japan's economic, social and political life. Meiji officials in the name of the young emperor instituted huge new programs. among these were the creation of a modern army and navy. They used the Prussian Army (because of the victory in the Franco-Prussian War) and the British Royal Navy as models. And they instituted a policy of industrialization to support these forces. These were steps the the traditional bound Chinese imperil regime refused to take. Notably the Meiji Government did not touch the country's social structure dominated by aristocrats with huge land holdings and a largely land-less peasantry. They also accepted the idea that a powerful country needed overseas colonies. All of this required that Japan build an oceangoing merchant marine (marus). Meiji officials from the very beginning gave shipping an important priority. This was because officials believed that it was European control of communications that had enabled it to exploit the trade and resources of Asia, especially China. 【Davies, p. 181. 】 The new Japanese leaders were thus determined to gain control over both coastal shipping and foreign shipping. This meant assisting its own people to break into the shipping sector and eventually modern ship construction. Policy announcements soon followed. The Government announced that not only could individuals own any number of ships (including foreign types meaning modern ocean-going ships), but that the Government would support such efforts. Such assurances and actual assistance gave rise to the birth of the Japanese merchant marine and shipping enterprises. The most important of these enterprises proved to be Mitsubishi. This company had its origins in the Shogunate. It was a unexceptional clan company in Osaka. The Mitsubishi shipping company was founded by the Tosa clan which purchased an existing business (1870). The company noting the direction of the new government saw opportunities in shipping. It obtained an imperial charter adopting the name Yubin Risen Mitsubishi Kaisha (1875). Another early entrant in the Japanese merchant marine was Nipponkoku Yubin Kisen Kaisha (1872). The Government offered the vessels it possessed under the condition that the company would both carry mail and operate regular services between Tokyo and Osaka. The Government provided generous and continuing subsides to both companies.

Fleet Expansion (Late-19th century)

Quite a number of entrepreneurs took advantage of the business opportunities created by Japan's industrial expansion and the lucrative incentives offered by the Government. In addition, thanks to the punitive action on Formosa (1875), the government was made aware of the military importance of a merchant marine at a very early point. We see the development of both ocean-going and coastal shipping. All the ocean-going vessels were ordered in foreign shipyard. Japanese construction was all basically craft-construction of wooden vessels. Japan was just beginning to produce steel and there were not yet any modern shipyards. The new vessels were all steamers. The propulsion was all seam power generated by coal. Coal was the source of power in th 19th century. And coal was one of the few natural resources Japan had. But in the 20th century, the world would begin shifting to oil. This as a resource Japan did not have. And the shift to oil would especially occur in shipping--both naval and commercial. And the consequences for Japan would be profound.

Ocean-going shipping

A bloody incident on Formosa (modern Taiwan) moved the Japanese Government to get involved n ocean-going shipping. The Japanese Government decoded tp to purchase 13 steamers for military transport to protect Okinawans on Formosa and to punish the violent tribal perpetrators. Formosa was a large island just south of the Ryukan Islands, of which Okinawa is the main island. The Ryukans were Japanese. Formosa as nominally Chinse although China took little interest in it. The Japanese Government after the Formosa Incident had no use for these steamers as Japan did not yet have a navy of any consequence. The steamers were tired over to Mitsubishi. The Government also granted Mitsubishi a subsidy of Y 250,000 annually. At te same time, Mitsubishi began a regular mail line between Yokohama and Shanghai--Jpn and China's greatest ports. This was first regular navigation between Japan and any foreign country. The Government also financed Mitsubishi's purchase of four American vessels of the Pacific Mail Steamship Company competing with Mitsubishi. The company then expanded its services to British-controlled Hong Kong further south. Domestic civil disturbances (Satsuma Rebellion) launched by disaffected Samurai forced the Government to purchase more modern foreign steamers (1877). They were needed because the rebellion was centered on the southern-most island of Kyushu. After the Rebellion was crushed, the Government again purchased the 10 steamers purchased to Mitsubishi. This meant that Mitsubishi dominated Japan's new merchant marine, operating over half the country's total tonnage of modern vessels. Meiji officials apparently did not want one company to totally dominate the merchant marine. The Government financed the creation of Kyodo Unyo Kaisha with an infusion of Y 10 million. It was a joint venture combining smaller companies and the Government with 45 percent ownership. The company ordered 15 vessels from Britain and committed to provide military and commercial transport needed by the Government. This seemed more cost effective than buying vessels and tn turning them over to companies after a conflict. Unyo found itself competing with Mitsubishi and both were incurring substantial losses. This left the Government in a peculiar position, it was subsiding two competing companies in a price war. The subsidy was in essence fueling the losses. As a result, both shipping companies were consolidated under a combined entity -- Nippon Yusen Kaisha, better known as NYK which became Japan's most important maritime shipping company. The Government continued to offer substantial support. They pledged that for 15 years, they would make up any deficiencies should profit margins fall below 8 per cent. Thus progress was slow: 0.1 million tons (1890) and 0.5 million tons (1900). 【Lloyd's】

Coastal shipping

As NYK was being created, there were also developments in coastal shipping. Small shipping companies began springing up, being funded by private individuals. The coastal trade was booming as Japan began to industrialize. There were few barriers to entering the trade. The vessels involved at first were mostly built in Japan and did not require a large capital outlay. As a result, a destructive competition among small-scale operators developed. The Government intervened a convinced the boat owners to pool their resources. They organized a joint stock company -- Osaka Shosen Kaisha (OSK) (1884). At the time OSK consisted of some 50 boat owners operating 93 small boats. As with NYK, the Government would grant them a subsidy. They operated 20 mail services as part of the coastal trade. A line was established with Korea (1891).

Other developments

Meiji authorities promoted the development of a merchant marine, primarily involving the creation of the NYK and OSk. This involved inauguration of services to other Asiatic ports, primarily in China and Korea. There was still no shipbuilding other than the limited wood ship craft. The modern steel hulled ocean going sipping, like he Navy's modern war ships were imported. All the ocean-going vessels were ordered in foreign shipyard. Japanese construction was all basically craft-construction of wooden vessels. Japanese industry was rapidly growing, but was just beginning to produce steel. There were not yet any modern shipyards. They were all steamers. The propulsion was all steam power generated by coal. Coal was the source of power throughout the world in the 19th century. And coal was one of the few natural resources Japan had. But in the 20th century, the world would begin shifting to oil. This as a resource Japan did not have. Not only did Japan no have oil, but neiher did the other countries of northeast Asia (China, Korea, and Russia). And the shift to oil would especially occur in shipping--both naval and commercial. And the consequences for Japan would be profound given that its major source of oil was the United States. .

Military Actions

World leaders in the 19th century believed that great powers needed colonies. This was when Britain was building its vast empire. France lost its empire (18th century) and began building a new one after the Napoleonic Wars. Even minor European powers like Belgium, Denmark, Portugal, and the Netherlands had empires. Russia had colonies, only European colonies. Japan was an empire without colonies. And many Japanese officials as the country began to industrialize saw a major problem. Japan had almost none of the critical raw material needed for an industrial economy. Other countries like Britain and France got needed raw material from their colonies. Colonies were also important to provide markets for manufactured goods. China dominated the region for most of history. Only Japan was able to resist Chinese/Mongol power because f its island location. Japan managed to successfully repel two Mongol invasions led by Kublai Khan (1274 and 1281). The collapse of Imperial power in China created opportunities for the Japanese. China and its Korean client state had many of the resources Japan needed. Russia appearance into the Far East created a new power Japan had to deal with.

First Sino-Japanese War (1894-95)

Japan's initial war to acquire colonies and resources was the First Sino-Japanese War (1894-95). As a result the War, Japan acquired Formosa/Taiwan and replace China as the dominant force in Korea. Formosa was also an island and thus shipping was a major factor in the War. The Japanese transported 0.2 million soldiers to China and supply them there for more than a year. Japan by his time Japan did have a merchant fleet, but hardly one that could fill such enormous demand. The Government requisitioned all the large ocean-going vessels. This meant that all the transport services for the civilian economy were withdrawn. This impacted important Japanese businesses. The Government had to purchase ore foregn vrssels. This included 14 vessels 41,800 GRT. Officials turned them over to NYK to manage and operate. More foreign vessels were purchased privately. Japan more than doubled the size of its merchant marine in only 2 years. But officials came to the conclusion that this was not the best way of meeting shipping needs. Officials studying the shipping issue came up four policies to prepare for future emergencies: 1) investment in the industry, 2) development of a merchant fleet that could meet commercial and naval needs, 3) opening scheduled routes to main markets, and 4) the creation of a shipbuilding industry. To pursue these goals the government passed two subsidy laws (1896). The Navigation Encouragement Law provided subsidized Japanese-owned steel and iron ships involved with foreign trade. The impact of these subsidies was to create a whole new industry -- a modern shipbuilding industry. Service to foreign countres expanded as well as coastal services. New companies were founded. The first Japanese-built steel ships began appeared.

Russo-Japanese War (1904-05)

Both Japan and the Russians sought to take advantage of the decline of Imperial China by establishing economic control of Manchuria and Korea. This eventually led to the Russo-Japanese War (1904). Japan launched the war by a naval attack on Port Arthur (1904). The Russians has trouble supplying their troops. The outcome of the war was settled by the great Japanese naval victory at Taushima (1905). It was a shocking first Asian victory to a colonizing European power. Japanese military resentment toward the Americans began because President Roosevelt helped negotiate an end to the War. Japanese militarists believed that they would have gained much more had the war continued. Japanese merchant shipping was again impacted. The Government again needed to requisition the country's merchant marine for military operations and despite he expansion of merchant vessels was still not capable of meeting the military needs. The Russians had been a more powerful challenge than the Chinese. The Government was able to requisition 260 vessels totaling 680,000 gross tons. This mean that regular services to Europe, Australia, and the Pacific coast of the United States had to be withdrawn. The Government had to contract another 164 vessels totaling 310,000 gross tons.

Expanding Merchant Fleet (1906-14)

Creation of a merchant fleet proceeded slowly bin the9th century, but with Japan's expanding industry this changed and reached 1.1 million t (1910) and 1.7 million t (1914). This meant that Japan had the world's third largest merchant fleet after Britain (12 million tons) and Germany ( 2 million tons). 【Kirkaldy】 Japan's shipbuilding industry had grown more slowly than in other countries because of its lack of modern steel and engineering industries in the 19th century. But after the turn of the century this had changed and by 1914 Japan was capable of constructing virtually every type of vessel. 【Davies】 This included modern naval vessels. And merchant vessels required less advanced technology. Construction costs in Japan, however, were high despite low labor costs. Thus Japan could not export. Japanese Government and industry figures were concerned that the withdrawal of Japanese merchant men from commercial services and contracting foreign- built ships would adversely affect Japanese shipping after the Russian War. As the economy played out after the War, heir concerns were misplaced. The country's industrial development along with the resulting of foreign trade shipments created demand not only for the expanded tonnage, but also a need for more shipyards. Both NYK. and OSK purchased new vessels and expanded their service routes. New companies appeared including Nisshin Risen Kaisha which received subsidies to open service to Chinese ports. An imperial order which provided for a rebate of duties on imported shipbuilding materials. Shipyards were extended and facilities were taxed to the limit to meet the demand for the construction and repair of warships and merchant vessels. The Government introduced a new rebate of duties on imported materials needed by domestic shipyards (1906). Japanese yards were working at capacity to meet the demand for the construction and repair of both naval vessels and merchantmen. One would think that the industry needed no Government stimulation. But the domestic fleet's inability to meet needs during war emergencies. So the government decided to further stimulated constructing with the Navigation Encouragement Law of 1896 was superseded by the Ocean Service Subvention Law (1909). The Government wanted shippers to expanded service to other countries (1915). The law offered shipping companies which had were ordered by the government to operate on specified routes (Europe, North America, South America, and Australia), should be granted subsidies for 5-year periods. Shipping conditions were improving. The coastal trade had been partially open to foreign ships at a time that the domestic fleet was inadequate. The Government restricted the coastal trade to domestic vessels. The Japanese shipping companies benefited from the Italo-Turkish and the Balkan Wars (1911-13). At the same time, Japanese exporters were achieving success in Chinese and Manchurian markets. Carter and freight rates were at attractive levels. The Japanese shipbuilding industry had benefited by increasing demand, but has substantial issues. Cost of production was still high compared to foreign yards, only partially offset by government subsidies. And their facilities were still not up to international standards. Japanese shipping companies were more successful than the ship builders. They managed to earn a place in some of the more profitable routes (especially to New York). They tended to compete at the bottom of the market with Greek owners. Their success was gained by using sub- standard vessels and low crew wages. This enabled the merchant fleet to expand, but the average age of the ships increased. With some exceptions, the Japanese merchant fleet consisted of poor quality vessels operated inefficiently. 【Davies, p. 182.】 It was the the wage costs, then, which allowed it to offer competitive services.

World War I (1914-18)

Japan decided to participate in World War I. This was largely based on its naval alliance with the British. Japanese leaders did not want to take on the Royal Navy, but there were gains to be made by taking on the Germans who had poorly defended possessions in the Pacific. The War resulted a substantial expansion of the Japanese merchant marine. There was an increased need for shipping and normal trade trade patterns altered. One of those changes was the expansion of Japanese trade and ocean shipping facilities. Japanese foreign trade increased massively from Y 1.2 billion (1914) to Y 3.6 million (1918). The country's merchant marine expanded from 1.7 million tons (1914) to 2.,3 million tons (1919) 【LLoyd's】 (Data for 1918 are unavailable.) And the share of the trade transported in Japanese ships increased from 57 to 79 per cent during the War. Japanese steamship companies transported enormous profits, increasing 1,600 per cent. Tramp fighters might pay for themselves in a single delivery to Europe. The new shipbuilding industry also benefited hugely. New vessels bought massively increased revenue. Builders received only Y 110 per dead-weight ton (1914). This had risen to Y 700-800 per ton (1917). This meant that exiting shipyards expanded and new yards were opened to meet the demand of not only Japanese buyers, but also the Allies and finally the Americans. The Americans in particular needed ships to bring its immense power to bear on the Germans. The results were astonishing. Japanese yards built only 12 large freighters (more than 1,000 gross tons) (1914). Of course the War only began in August. This increased to 180 large vessels (1918). The increase in prices meant enormous profits. Builders qualified for construction bonus awards authorized by the the modified 1909 law totaled Y 1.6 million (1914). This increase to Y 5.2 million (1917). The profits builders were reporting could no longer justify these bonuses. They were becoming a heavy drain on the Japanese Treasury. The Government as a result repealed, the awards (1917). There were a range of issues the Japanese merchant marine faced, the most severe was palpably the lack of raw materials available domestically. This included iron and steel the most basic material needed for ship building. Most of the iron and steel needed had to be imported. The War created such a demand for steel that Japanese yards had a hard time obtaining the needed material. While the Government repealed the construction bonus system (1917), the Government passed the Steel Bonus Law. As modified (1918), the law exempted the nascent Japanese steel industry from income and business taxes. It also offered bonuses of 12 to 15 per cent of the value of steel produced to build or repair both naval and merchant vessels.

Roaring Twenties

After World War I, countried had to adjust their economies had to readjust as men were demobilized and war time contacts cancelled. Companies had to retooled for peace time civilian production. This included Japan although the country's commitment to the war not as strong as was the case in Europe. Japan did not, however, recover to the same extent as Europe and America. One sector that was especially impacted was the shipping industry. It had hugely expanded because of the massive profits possible from war-time contracts. And very quickly they began experiencing financial problems. As one historian explains, "When the artificial stimulus of the war was removed, the height of its war-time prosperity was nearly matched by the depths of its post-war losses; but here again the government was well provided with means of alleviating the financial distress." 【 McCormick 】 The close relationship between the Japanese government and the banking system was very imprint to the industrialization of Japan, And this included the building of the merchant marine. The 1896 Navigation bonus program continued in force. An addition was approved (1921), further modified (1929). It provided for postal route sunsidies to the NYK London and Melbourne lines. After some initial readjustment, the world economy recovered from World War I. This created economic opportunities for exporting countries like Japan. The Japanese Government expanded subsides for shipyards (1926). There were several provisions. 1) Some manufacturers of iron and steel machinery were given the powers of expropriation of land for building factories. 2) Some manufacturers were exempted from taxes for 16 years. 3) bonuses were offered companies making products for ship construction and repair. 4) Iron and steel mills could qualify for tariff nonexempt importing needed tools, machinery, and other materials. The Showa Financial Crisis of 1927 was a foretaste for Japan of the Great Depression. It was a reflection of the persistent financial instability resulting from incomplete restructuring of troubled businesses. And a general reluctance of banks to dispose of bad loans. The Government initiated reforms involving the substantial injections of public funds and the take over of many small banks. The shipping companies were affected by the financial crisis. The Fifteenth Bank failed resulting in failure of the Kawasaki Dockyards, one of the Japan's two most important shipyards. The Dockyard was a major investor in Kokusai Risen Kaisha, Japan's third largest shipping company. The Deposits Bureau held a loan of Y 29 million. The failure of Kokusai would have meant throwing 300,000 tons of shipping on the market. The Government's Industrial Bank of Japan was took temporary control and management of Kokusai. Toyo Kisen Kaisha was unable to maintain its California service. NYK with a service to South America took it over. There were some limited benefits to the financial crisis. The needed reforms meant easy money conditions which placed the stronger companies, allowing them to raise new capital at reasonable interest rates. NYK issued debentures valued at Y 30 million to finance a new vessel construction for a Puget Sound-San Francisco-Far East service. Many other shipping companies were in less sound financial condition. The Government introduced new measure to prevent bankruptcy. A high import duty was placed on older vessels (over 20 years). Maritime officials concluded that the tendency to operate old, obsolete vessels was harming the industry. The Industrial Bank offered to loan shipping companies half the value of vessels under 15 years of age purchased from abroad. The Minister of Finance offered a new loan program to companies for the construction of motor vessels. Interest rates were not to be in excess of 6 per cent, of which the government was to contribute up to 2 per cent. These and other programs, however, had little effect and the shipping industry was in no condition to face the coming Depression. .

Great Depression (1930s)

The American stock market crashed (September 1929) This led to the World-wide Great Depression. Except for America, the countries most affected were exporting countries with Japan and Germany at the top of the list because so many countries including the United Sates increased tariffs to protect domestic industries. Japan's shipyards as a result of World War I were overbuilt. The domestic market for new ships declined. Numerous measures proposed after 1929 to improve the situation included a reduction of the number of shipyards by amalgamation, writing off bank loans to shipbuilders, embargoes on the importation of old vessels, manufacture of machinery for other industries, and even the manufacture of motor cars. At the same time, the Imperial Navy was placing orders within the limits of the Washington Naval Accords. There was an over-supply of merchant vessels worldwide. And the Depression led to a decline in world trade, meaning a falling demand for shipping. Within a short period, Japanese shippers found themselves in a desperate situation. Time charter rates for freighters collapsed. 【 McCormick 】 NYK and the OSK paused their dividends (1930). Japanese exports fell from Y 4.4 billion (1929) to Y 2.4 billion (1931). Construction also collapsed, from 186,000 tons in 1930 to 46,000 tons (1932). Shipping companies tied up many of their vessels. Tied-up merchantmen in Japanese ports increased from 70,000 tons in January, 1930, to 310,000 tons 12 months later. At this point, other developments played in. Britain battered by the Depression was forced to abandoned the gold standard (September 1931). This enabled British exporters to regained their position in foreign trade, including with Japan in Asian markets. At he same time, the military was making its control of Japan apparent. The country's military (href="/essay/war/ww2/cou/jap/road/kwan.html">Kwantung Army) seized Manchuria. There were no immediate consequences. China did not have the military capability to resist. But the Chinese began boycotting Japanese products. Japan withdrew from the League of Nations. This began the process of changing Japan's international image. Again there was no immediate impact, but it was the beginning of a process that would lead to disaster for Japan Charters had to be cancelled. Maritime activities dropped precipitously. The Japanese Government attempted to stem the flow, but Japanese gold holdings steadily declined. Some 10 percent of the Japanese merchant shipping was tied up. Shipyards wee devoted mostly to repair work and naval orders. Economic conditions led to a new government (December 1931). The new administration stopped further gold outflows. A huge budgetary deficit followed (1932). The result was to undermined the yen which was debased to US$ 0.20, a devaluation of 60 percent. The impact, was. to improve Japan's terms of trade. The devaluation made Japanese products and services more competitive causing a business boom. Te shipping industry was a huge beneficiary. Shipping companies especially befitted from increased exports and imports because some 65 percent of Japanese foreign trade was carried in Japanese-owned shipping. Foreign trade from Y 2.4 billion (1932) to Y 4.5 billion (1934). This more than made up for losses in Chinese exports. This cause an expansion in he Japanese economy nat a time that both other countries continued to suffer from the on going Depressin. The increase in cargoes caused some tramp freighter owners start regular services on important routes. Suddenly there was shortage of freighters. Shipping companies began charterng foreign vessels. Some 60 foreign vessels totaling 488,000 gross tons were under charter (1935). The Government along with devaluation introduced the 'scrap and build' program. They determined that Japanese shipping companies were operating many old vessels (vessels over 25 years). One source describes the shipping industry as 'fundamentally unsound both financially and physically' Wanted some of these of old vessels to be retired and the shipping companies to order new vessels from domestic shipyards. Many of the smaller shipping companies were heavily in debt and unable to order new vessels built. The Ship Improvement Bill (1932) envisioned a two-for-one 'scrap and build' plan. This thus involved both building new vessels, but reducing the size of th merchant fleet. The Government was looking for ships with speeds of 13.5 to 18 knots. The industry responded enthusiastically, but more with the building than the scraping. A second plan was introduced which dropped the 2:1 provision and involved naval coordination.

Road to War (1935-39)

The Great Depression severely impacted Japan and Germany, radicalizing both countries. But Japan recovered more quickly than Europe and America. The Japanese military by 1930 had established huge influence in Government. Japanese military units seized Manchuria and the civilian government had to acquiesce (1931). This began the aggression that led to World War II. When the League of Nations objected, Japan left the League. This began the road to war. The major powers agreed to limit naval building (1922). Japan objected to its quotas, but accepted them. Still offended by heir quota, refused to continue the limitations and withdrew from the the Second London Naval Treaty (1935). Japan then began a massive building program. The United States responded, if belatedly. As part of their naval buildup they also increased construction of merchantmen, including tankers. The merchant fleet was about 4,100 tons (1935), but by 1941 had been increased to 6,100 (1941)--an all time high until the 1960s. Tanker tonnage was increased from 0.2 million tons (1937) to 0.4 million tons (1941). 【Japanese Ministry of Transport】 Much of the increase was associated with the invasion of China (1937), but preparing for a naval war with Britain and America was also a factor.

World War II

Just before the War, a naval historian wrote, "The rise in power and prestige of the Japanese merchant fleet since the advent of the iron ship is a maritime exploit of unparalleled proportions. A single generation ago Japan’s merchant marine consisted of 20 sailing vessels for every steamship and the operation of the fleet was confined principally to the China service and the coastal trade. Today her shipping companies operate vessels on regular runs over the principal sea lanes of the world. Her tramps dot every ocean and compete for cargo in every port of the globe." 【 McCormick 】 The Japanese merchant marine fleet totaled 5.4 million gross tons or about 8 per cent of the world's tonnage when World War II broke out in Europe (1939). It ranked third only after Britain and the United States. This was adequate for an important industrial nation. The problem for Japan was that in war time the need for maritime transport escalates, especially a naval war fought over the vast distances of the Pacific Ocean. With Japanese attack on at Pearl Harbor the country's merchant marine had increased to 6.1 million tons (1941). 【Japanese Ministry of Transport 】 As in past wars it was converted for war-time support, serving as troop transports, delivering arms and and ammunition and other supplies to wide-spread Pacific garrisons. Japan went into a construction frenzy to expand the maru fleet. The Japanese tried to make available maru tonnage do by ordering garrisons to become self sufficient in food supplies. The result was that large numbers of Japanese military personnel as well as the civilian population in the occupied territories starved. During the Pacific War, the United Sates destroyed some 8 million gross tons of merchant ship tonnage. This was more than Japan began the war with because if the ships built during the War. were lost, including the vessels built during the war. This did not occur in a slow drip by drip process. Ship losses were very limited in 1942 and most of 1943. The Japanese dominated the seas in 1942 and still had a significant presence during 1943. The United States launched unrestricted submarine warfare within hours of Pearl Harbor. The problem was that the Submarine Service was not trained for this and too many of the torpedoes were defective. These problems were not addressed for over a year and half. Once this was addressed, the sinkings escalated. Japan launched a huge building program , especially of tankers (1943-44). Over 150 tankers were built, doubling the size of the tanker fleet. 【Japanese Ministry of Transport】 But the vessels by late-1943 were lucky to make one return trip. in about a year the maru fleet was largely destroyed. This cut the war factories of the Home islands off from needed raw materials. It also sharply reduced needed food imports. Japan began the War with a much smaller industrial base than America now had factories unable to function and a population nearing starvation. . And this was before the American strategic bombing campaign had kicked in.

Sources

Davies,P.N. "The development of the Japanese shipping industries," pp. 181-97.

Japan Ministry of Transport.

Kirkaldy, A.W. British Shipping reprinted by Augustus M Kelley (New York: 1970).

Lloyd's Register

McCormick, Harold A. "Japanese merchant marine history," U.S. Naval Institute Proceedings Vol. 62, No. 7 (July 1936).

Created: 2:17 AM 4/25/2025
Last updated: 6:33 PM 4/26/2025