Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan (review)

Japan specialists looking for a potent lesson in modern history need look no further than Lever of Empire. With his focus alone, Mark Metzler (University of Texas at Austin) commands one of the most authoritative new voices on modern Japanese history. He is, after all, the first American Japan scholar in recent years to begin a professional career tackling matters of economy. As such, his work is of immediate value for many Japan specialists in this country who remain largely ignorant of economic issues (this reviewer included).

This primer is especially useful because it highlights the international gold standard within a framework easily recognized by Japan specialists. Unlike many postwar pioneers of Japanese economic history, Metzler is concerned less with patterns of economic development per se than with what those trends say about the Japanese nation, empire, and party politics. Through the prism of international finance, we obtain a powerful new glimpse at nation building, imperial expansion, and the ultimate decline of liberalism in Imperial Japan.

Metzler offers first a novel look at the birth of a modern nation. Specialists have unearthed ample evidence of "sprouts of capitalism" in Tokugawa Japan—urbanization in Edo, commercialization surrounding post stations, advanced literacy, etc. Lever of Empire adds to this picture the story of early "monetary modernity." Fifty years before Britain fully realized such a measure, the bakufu in 1772 instituted a "partial gold standard." It circulated, along with silver-by-weight currency, gold-denominated silver coins valued not by weight in silver but by a face value given in terms of gold ryō.

Financial developments accentuate the drama of Japan's transition from a feudal to a modern state. Meiji specialists continue to stress official reluctance to open Japanese capital markets in the latter nineteenth century. But, while the Tokugawa "partial gold standard" depended upon financial isolation, the intrusion of Western power not only destroyed that standard, it spurred Japanese integration into an international monetary regime through Japanese adoption of an international gold standard by 1897. Between 1897 and 1913, Japan was the single largest state borrower on the London money markets.

If Metzler raises new appreciation for the internationalization of the Meiji state, he echoes recent efforts by Peter Duus, Robert Eskildsen, and Alexis Dudden to do the same for early Japanese empire building. Adopting the gold standard produced economic effects in Japan equivalent to Fukuzawa Yukichi's famous appeal for a "departure from Asia": it stabilized trade with Great Britain and the United States and provoked wild fluctuations in Sino-Japanese commercial exchanges. The degree to which Japan set out in the latter nineteenth century to build "a European-style empire on the edge of Asia" (to borrow Inoue Kaoru's formulation) is accentuated by the fact that both the Sino-Japanese and Russo-Japanese Wars, even Tokyo's first forays into the competition for loans to China, were all financed in European and American capital markets. Even the annexation of Korea appears in this context as a critical component of Japan's integration into an Anglo-American global order. Korean currency reform under Japanese auspices produced the first yen-based gold-exchange standard. Korean money came to be based on a specie reserve held in Tokyo, which in turn depended on a reserve held in London.

Metzler's principal focus is the pivotal era of party politics in 1920s Japan. Because of its association with renewed militarism and imperialism, Japan's return to the gold standard at the inopportune moment of global depression is a familiar tale to Japan specialists. But nowhere else in English do we have such an in-depth examination of Japan's initial departure (1917) and subsequent return (1930) to the standard. It is an absorbing tale that highlights a handful of pivotal individuals within an extraordinarily global network of finance.

The principal player is Inoue Junnosuke (1869...