Investing Japan: Foreign Capital, Monetary Standards, and Economic Development, 1859–2011 by Simon James Bytheway (review)

Japan’s integration into the world economy dates back to the sixteenth century, when silver and copper exports made it an important terminus for the Dutch East India Company. Depletion of the mines and a new hegemony that sought to bring trade under its own control restricted interactions for almost 250 years. That changed in 1854 when Admiral Perry’s Black Ships ended the Tokugawa government’s ability to control trade and helped bring about its downfall. That is where this book picks up the story.

The new world included the establishment of a national currency, which eventually was tied to the British gold standard; the growth of international finance, including bond issues in London and later New York; significant levels of foreign direct investment from the 1910s through the 1930s; and after WWII the movement from autarky under the U.S.-led Occupation to renewed integration into the world economy. Bytheway’s history tries to cover this entire sweep of time and issues. Needless to say, that is a daunting task, particularly as no single analytic framework can be used to organize such disparate topics.

The initial three substantive chapters look at the stabilization of the new currency in the late 1800s, as Japan moved from its previous domestic bi-metallic system to a de facto silver standard. This was followed by a transition to the gold standard, depositing the spoils of the 1895 Sino–Japanese War in London. Three recent books cover this era: Metzler’s Lever of Empire (2006), Schiltz’s The Money Doctors from Japan (2012), as well as Smethurst’s biography of Takahashi, From Foot Soldier to Finance Minister (2009), all of whom the author duly acknowledges. Based on archival work, he adds a number of anecdotes to their accounts, with occasional attempts to frame them. For example, he claims that the amount involved in the reparations, £38 million, was large for that era (69). However, he stops there. How large were contemporary railroad bonds or those of Russia or other sovereign issuers? A quick Internet search suggests Germany was issuing £80 million of bonds a year. If it was large—he notes that the largest bank check yet processed, for £11 million, was tied to these reparations (42)—what adaptations were made? He provides no follow through.

Unfortunately, the same is true of the rest of the book, much of which consists of lists of bond issues, a sector-by-sector list of the Western ventures in Japan, and World Bank loans in the post-World War II era. Chapter 7, on foreign direct investment in Japan through 1939, is potentially the most interesting. Along with a six-page table detailing an array of specific investments, the author provides short case studies of thirteen different sectors. What is a reader to learn from these? If the economy is divided into sectors, are there some with no investment in Japan but significant investment elsewhere? I would suggest railroads, and indeed he notes that after a political reaction to a 1903 investment, no further transactions followed (172–173). Similarly, he notes two investments in munitions-related enterprises. The first was soon bought out by the military, but the fate of the second is not mentioned, or whether there were other technical or licensing tie-ups (161–162). Similarly, Chapter 9 provides a four-page table of foreign retail operations, ranging from 1957 (Coca-Cola) through 2011 (American Eagle). If someone wants to know the timing of entry in Japan of various luxury brands and franchises (and in footnotes, of the exit of several major companies), this is the place to go. Then again, there is no analysis of timing, or which segments saw trade but no investment, or where these were successful and where they failed.

In sum, the book offers little assistance in interpreting the mass of data. The perspective...