Category Archives: industry

by Joel | 1 April 2022 · 3:33 pm

Brazil’s Economic Miracle

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 428-429, 435:

The reasons for the failure of the guerrillas are complex. With their predominantly middle-class, university-educated cadres they were unable to break out of their political isolation – the clandestine Communist Party disapproved of the guerrillas’ strategy and blocked their access to working-class organizations. The terrorist attacks on military targets precluded the emergence of any sympathetic groups within the armed forces who might have staged a coup d’état, this being the usual short cut to power for progressive movements in Latin America. But, decisively, the guerrilla campaign coincided with the long-awaited upturn in the economy. From 1968, while the guerrillas were robbing banks and bombing barracks, life was getting better for the middle classes and the skilled workers in the cities, which is where, in a rapidly urbanizing country, the political fate of the nation would be decided. In short, what finally put paid to the prospects of the urban guerrillas was the arrival of the Brazilian ‘economic miracle’.

As far as the generals were concerned, the ‘miracle’ obviated the need for an explicit political ideology to run the state. The tremendous popular enthusiasm generated by the idea of an economic miracle was manipulated by the junta to rationalize their continued suspension of full democratic rights. The economic upswing was ‘miraculous’ in that it seemed to be a sudden take-off into self-sustaining industrial growth, the hallmark of a modern economy. Brazil was at last on its way to world-power status from the doldrums in which it had found itself for the best part of the 1960s.

The Brazilian rate of economic growth was indeed amazingly good: in 1968–74 the economy grew at an average yearly rate of between 10 per cent and 11 per cent. Even after the sudden rise in the world price of oil in 1973, which seriously damaged all the industrial economies, the Brazilian rate of growth averaged between 4 per cent and 7 per cent a year. By the mid-1970s the volume of exports had quadrupled since 1967. Far more significant was the fact that manufactured goods had replaced coffee as the major component of exports: the stubborn Latin American problem of monoculture – the dependence on the export of a single primary commodity – had been solved.

Without doubt, a substantial industrial revolution had occurred in Brazil; and it had largely been engineered by technocrats sponsored by the armed forces. But this success was built on the programme of industrialization achieved over many years since the foundation of the Estado Nôvo by Getúlio Vargas in 1937. Underlying the intervening conflicts of parliamentary politics, there had been a remarkable continuity in the course of Brazilian development from the Getúlio Vargas era to the military governments of the 1960s and 1970s. Development continued to be based on a sustained drive for industrial growth largely financed by foreign loans and investment, but directed by the state. The military governments of the 1960s and 1970s kept all basic industries and utilities under state control; they largely retained the nationalist policy of import-substitution industrialization by selective tariffs; and they also preserved the core of the social welfare and labour legislation of the Estado Nôvo.

…

Brazil’s extraordinary drive to modernize in the twentieth century produced a powerful industrial economy in the space of little over three decades. The costs were enormous: acute dislocations of regional economies, the destruction of virgin lands, an imbalance between the countryside and the cities, and deep cleavages between the working class, industrial capitalists and the middle classes. And yet, industry did not become productive enough to absorb the potential labour force, while the countryside remained under-productive and socially divided. Successive governments tried to force the pace of industrial development, as well as increasing spending on welfare programmes to alleviate the social misery. The results were vicious circles of inflation and budget deficits, which spiralled uncontrollably, robbing governments of authority. In 1964 the armed forces intervened to try to restore order, but by the late 1970s they too had been drawn into the spiral of inflation and debt; their historic pursuit of ordem e progresso had led, paradoxically, to a situation where economic progress had become the enemy of social order.

The Brazilian crisis of the 1980s was as much a crisis of the state as of the economy. In the medium term economic improvement might come through an upturn in the world economy combined with a successful anti-inflation programme and international assistance with debt relief. But a lasting settlement of the crisis would require the emergence of a legitimate democratic state, whose representative institutions could command the confidence of the nation as a whole.

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by Joel | 30 March 2022 · 7:17 am

Latin American Debt Crisis, 1980s

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 364-367:

The mounting problems caused by the economic distortions of import-substituting industrialization [= ISI] and the associated weakening of the state came to a head in the 1980s. The crisis had been deferred in the 1960s by strong world growth, and in the 1970s, when international demand was slack, by foreign loans. But a sudden change in the world financial system effectively cut off the flow of capital to Latin America.

In August of 1982 the Mexican government announced that it was unable to pay the interest on its debt to foreign banks. Mexico was followed shortly by virtually all the Latin American countries, including Cuba. (Suspension of debt payments occurred also in African and Asian countries, but the sheer size of the Latin American debt focused international attention on the continent.) The total outstanding Latin American debt in 1982 was estimated at $315.3 billion, although over $270 billion was owed by just five countries – precisely those which had undergone the fastest ISI growth in the 1960s and 1970s. Brazil was the largest debtor, owing $87.5 billion; Mexico owed $85.5 billion, Argentina $43.6 billion, Venezuela $31 billion and Chile $17 billion.

What had caused the crash? The immediate factor was the steep rise in US interest rates in 1979–82. This was a response to the high rates of inflation and the consequent weakness of the dollar caused by the producers’ cartel, OPEC, sharply raising the price of oil in 1973 and again in 1979. A world recession followed, which had a disastrous effect on the economies of Latin America: commodity prices started to fall on world markets just when higher export earnings were needed to cope with sharply rising interest rates on the foreign debt.

The bonanza of lending and borrowing that Latin American governments and Western banks had indulged in throughout the 1970s had its origins in the very phenomenon that would cause it to come to an abrupt end a decade later: the OPEC cartel’s oil-price rises of 1973 and 1979. High oil prices allowed producer countries, especially the Middle Eastern Arab states, to build up huge surpluses on their balance of payments. Profits from oil exports were too large to be fully absorbed by investment in their domestic economies, and so these OPEC countries deposited vast sums of money in European and North American banks. Western bankers then set about looking for ways of getting a good return on these windfall deposits, and their most willing clients were the developing countries of the Third World, who were hungry as always for development capital.

Latin America was especially susceptible to the blandishments of the Western banks, for in the early 1970s, as we have seen, the most advanced of the industrializing countries in the region had come to the limit of the ‘hard’ phase of import-substitution; the process of state-subsidized inward-looking development could be kept going only by borrowing abroad to cover the yawning deficits between national income and expenditure. There followed a mad spiral of irresponsible, profit-driven lending and unwise borrowing, in which Western bankers as much as Latin American officials appeared to overlook the implications of taking out huge loans on ‘floating’ instead of fixed interest rates. However, after the shock of the second oil-price rise in 1979, conservative administrations in the USA and other industrial countries like Britain decided to bring their domestic inflation under control by restricting the supply of money and credit; this economic policy choked off demand in the West and produced a worldwide recession. International interest rates on foreign debt suddenly started to ‘float’ ever upwards until by the middle of 1982 most Third World countries found it impossible to meet their interest payments.

Indebtedness and high inflation were not, therefore, peculiar to Latin America. In fact, most governments in the industrial countries had been running up debts during the 1970s. The US budget deficit in 1982 was actually larger than that of the worst Latin American debtors, and throughout the 1980s the Reagan administration, for fear of electoral unpopularity, was unwilling to cut it by raising taxes or reducing imports. Yet it was the Latin American debt and not the US deficit which caused international alarm, because a country’s economic health was judged according to its perceived ability to overcome its financial difficulties, a factor expressed in terms of the ratio of interest payments to export earnings. Latin American countries scored badly here, given their relative neglect of the export sector in the pursuit of import-substitution. In 1982 most had ratios in excess of 20 per cent of interest payments to exports; Brazil and Argentina came off worst with ratios of 57.1 per cent and 54.6 per cent respectively, while Mexico, despite being a major oil exporter, had a ratio of 39.9 per cent. In other words, the economies that had grown fastest in the 1970s were the most deeply indebted in the 1980s.

What had gone wrong with ISI development? In essence, it had failed to cure the underlying malaise which had begun to show itself as early as the 1920s – lack of productivity. With the aim of achieving self-sufficiency, economic planners had concentrated on substituting industrial imports by setting up national industries and protecting them behind high tariff walls to the general detriment of agriculture and the export sector. (Brazil was a partial exception since from the mid-1970s it had begun to subsidize industrial exports – an expensive exercise that did not tackle the underlying problem of productive efficiency.) National industry had been overprotected for too long and had failed to become efficient and competitive: the price of its manufactures was often up to three times the world price. Latin American economies therefore ended up with not only an unproductive export sector, dominated still by low-value primary commodities, but also an unproductive industrial sector, which nevertheless consumed expensive imports of technology. The chronic shortfall between exports and imports resulted in high inflation and mounting debts.

To make matters worse, the debt problem had been badly aggravated by the financial instability caused by hyperinflation in the 1970s. As confidence in the economy evaporated in the late 1970s, there occurred massive capital flight. Instead of investing their money at home – where the currency was virtually worthless and industries regularly made losses – rich Latin Americans put it into real estate abroad or deposited it in the very banks that were issuing loans to their own governments and companies. Huge sums were taken out of these countries: the World Bank estimated that between 1979 and 1982, $27 billion left Mexico, nearly a third of its foreign debt in 1982, and $19 billion left Argentina, whose debt in 1982 was $43.6 billion. (Brazil and Colombia were relatively unaffected because of their sustained growth and high domestic interest rates.) US and European bankers colluded fully in this crazy financial cycle, pressing high-yield loans on Latin American governments while turning a blind eye to the lucrative deposits coming in from private Latin American sources (which were more often than not the indirect recipients of those very loans).

When the crash finally came, the wage-earners and the poor felt it most: inflation soared even higher in the 1980s than in the 1970s, real wages fell, and government spending on food subsidies, transport, health and education was slashed. In 1980–84 overall growth in Latin America fell by nearly 9 per cent. Consumption per capita dropped by 17 per cent in Argentina and Chile, by 14 per cent in Peru, by 8 per cent in Mexico and Brazil. Urban unemployment doubled in Argentina, Uruguay and Venezuela between 1979 and 1984, reaching unprecedented proportions everywhere else.

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by Joel | 26 March 2022 · 3:39 pm

Latin American Industry in World War II

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle p. 332:

The Second World War turned out to be a watershed for Latin American industrialization. The worsening international situation had exacerbated the historic rivalry between the armed forces of Brazil and Argentina. Sensing the drift to war in Europe, the military establishments in both countries wanted to develop their own armaments industries instead of relying on imports. But the manufacture of arms required the setting-up of steel and electrical industries, and so from the 1940s the armed forces of Brazil and Argentina pressed their governments to develop an industrial base. Furthermore, as the outbreak of war created strong international demand for raw materials and foodstuffs, the Latin American export-economies boomed, and as wartime conditions abroad reduced the flow of imports, especially luxury goods, Latin American countries were able to build up large surpluses in their balance of payments: this enabled national debts to be paid off and led to the accumulation of domestic capital for investment in industrial projects.

The USA played a decisive part in fostering industrial development during these years. Needing Latin American raw materials for its war effort, it offered loans, technical expertise and equipment to assist the Latin American countries in their programmes of industrialization. During the early 1940s numerous US missions went to Latin America and signed trade agreements. The major republics duly declared war on the Axis powers and supplied the Allies with minerals and commodities. The notable exception was Argentina, where sympathy for Italy and Germany within the military junta caused it to adopt an awkward neutrality, for which it forfeited the kind of technical and financial assistance from the USA that Getúlio Vargas was getting for Brazil. The lack of US aid was an important cause of the economic difficulties which General Perón had to face in the post-war years and which contributed to his downfall in 1955. Still, even though the USA helped Latin American countries to initiate industrial development, the policy of industrialization as such was the late product of the nationalism that had evolved since the turn of the century, intensifying in the 1920s and 1930s.

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by Joel | 19 March 2022 · 10:03 am

Elite Unity of Portugal and Brazil

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 208-209:

It was generally recognized in Portugal that Brazil was the engine of the imperial economy. Though Portugal might have reversed her trade deficit with Britain, it was only because she was herself in chronic deficit with her largest colony. The imbalance, however, did not lead to political frustration in Brazil. The Portuguese had been conspicuously successful in creating a unitary sense of empire in which the colonial élites could strongly identify with the mother country. In contrast to Spanish America, there was no great resentment against peninsular Portuguese: there existed little by way of a separate Brazilian culture for the élite; the involvement of sugar planters in the export-economy made for a common interest with Portuguese merchants, slave-traders and royal officials; finally, the massive presence of Africans and mulattos reinforced the identification of white Brazilians with their European cousins (family ties were, indeed, close).

The political value of this unitary sense of empire was well understood by Portuguese statesmen. Pombal, for instance, was careful not to alienate the Brazilian élites by his reforms. Posts in the bureaucracy and in the newly founded militias were open to Brazilians; local oligarchies were allowed to invest in the monopoly companies; the introduction of new crops into hitherto unsettled areas and the general expansion and liberalization of trade were designed to favour American as much as European Portuguese. Even the expulsion of the Jesuits, who had always opposed the white settlers’ Indian slaving and occupation of native lands, met with Brazilian approval – the large, well-managed estates of the Jesuits, as well as the Indian labour released by the destruction of the missions, provided excellent economic opportunities for wealthy merchants and planters. Brazil was considered to be fully a part of Portugal, even though it happened to be situated on the other side of the Atlantic Ocean; so much so, that the possibility of transferring the imperial court to Brazil in a time of peril had been mooted in Lisbon as early as the middle of the seventeenth century.

The American and French revolutions were to plunge all of Europe, Portugal included, into ideological and military turmoil.

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by Joel | 18 February 2022 · 9:07 am

Spanish Repression in the Americas

From Bolivar: American Liberator, by Marie Arana (Simon & Schuster, 2013), Kindle pp. 25-28:

FOR TWO HUNDRED YEARS, FROM the mid-1500s through the mid-1700s, the world that Spain had made had struggled against fiscal failure. The empire whose motto had once been a rousing Plus Ultra! had glutted world markets with silver, thwarted the economic growth of its colonies, and brought itself more than once to the brink of financial ruin. Nowhere was Spain’s misguided fiscal strategy more evident than in the streets of Caracas in the late 1700s, where a deep rage against the madre patria was on the rise.

The case of the Spanish American colonies had no precedent in modern history: a vital colonial economy was being forced, at times by violent means, to kowtow to an underdeveloped mother country. The principal—as Montesquieu had predicted a half century before—was now slave to the accessory. Even as England burst into the industrial age, Spain made no attempt to develop factories; it ignored the road to modernization and stuck stubbornly to its primitive, agricultural roots. But the Bourbon kings and their courts could not ignore the pressures of the day: Spain’s population was burgeoning; its infrastructure, tottering; there was a pressing need to increase the imperial revenue. Rather than try something new, the Spanish kings decided to hold on firmly to what they had.

At midnight on April 1, 1767, all Jesuit priests were expelled from Spanish America. Five thousand clerics, most of them American-born, were marched to the coast, put on ships, and deported to Europe, giving the crown unfettered reign over education as well as over the widespread property of the Church’s missions. King Carlos IV made it very clear that he did not consider learning advisable for America: Spain would be better off, and its subjects easier to manage, if it kept its colonies in ignorance. Absolute rule had always been the hallmark of Spanish colonialism. From the outset, each viceroy and captain-general had reported directly to the Spanish court, making the king the supreme overseer of American resources. Under his auspices, Spain had wrung vast quantities of gold and silver from the New World and sold them in Europe as raw material. It controlled the entire world supply of cocoa and rerouted it to points around the globe from storehouses in Cádiz. It had done much the same with copper, indigo, sugar, pearls, emeralds, cotton, wool, tomatoes, potatoes, and leather. To prevent the colonies from trading these goods themselves, it imposed an onerous system of domination. All foreign contact was forbidden. Contraband was punishable by death. Movement between the colonies was closely monitored. But as the years of colonial rule wore on, oversight had grown lax. The war that had flared between Britain and Spain in 1779 had crippled Spanish commerce, prompting a lively contraband trade. A traffic of forbidden books flourished. It was said that all Caracas was awash in smuggled goods. To put a stop to this, Spain moved to overhaul its laws, impose harsher ones, and forbid Americans even the most basic freedoms.

The Tribunal of the Inquisition, imposed in 1480 by Ferdinand and Isabel to keep a firm hold on empire, was given more power. Its laws, which called for penalties of death or torture, were diligently enforced. Books or newspapers could not be published or sold without the permission of Spain’s Council of the Indies. Colonials were barred from owning printing presses. The implementation of every document, the approval of every venture, the mailing of every letter was a long, costly affair that required government approval. No foreigners, not even Spaniards, could visit the colonies without permission from the king. All non-Spanish ships in American waters were deemed enemy craft and attacked.

Spain also fiercely suppressed American entrepreneurship. Only the Spanish-born were allowed to own stores or sell goods in the streets. No American was permitted to plant grapes, own vineyards, grow tobacco, make spirits, or propagate olive trees—Spain brooked no competition. It earned $60 million a year, after all (the equivalent of almost a billion today), by selling goods back to its colonies.

But, in a bizarre act of self-immolation, Spain enforced strict regulations on its colonies’ productivity and initiative. Creoles were subject to punishing taxes; Indians or mestizos could labor only in menial trades; black slaves could work only in the fields, or as domestics in houses. No American was allowed to own a mine; nor could he work a vein of ore without reporting it to colonial authorities. Factories were forbidden, unless they were registered sugar mills. Basque businesses controlled all the shipping. Manufacturing was rigorously banned, although Spain had no competing manufacturing industry. Most galling of all, the revenue raised from the new, exorbitantly high taxes—a profit of $46 million a year—was not used to improve conditions in the colonies. The money was shipped back, in its entirety, to Spain.

Americans balked at this. “Nature has separated us from Spain by immense seas,” exiled Peruvian Jesuit Viscardo y Guzmán wrote in 1791. “A son who found himself at such a distance would be a fool, if, in managing his own affairs, he constantly awaited the decision of his father.” It was as potent a commentary on the inherent flaws of colonialism as Thomas Jefferson’s “A Summary View of the Rights of British America.”

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by Joel | 17 February 2022 · 10:27 am

Home Country Hegemony in Spain’s Colonies

From Bolivar: American Liberator, by Marie Arana (Simon & Schuster, 2013), Kindle pp. 18-20:

AS DON JUAN VICENTE [Bolivar, Simon’s father] SETTLED into his new life, he began to be alarmed by Spain’s dominion over it. For fifty years he had been a loyal subject of the king, a trusted judge, governor, and military commander, but by 1776, just as the British colonies declared their independence, Don Juan, too, was dreaming of insurrection. He had good reason to. Spain’s Bourbon regime, which had high ambitions, had decided to impose a strict rule over its colonies. It put into place a number of anti-Creole laws that had a direct effect on Don Juan Vicente’s businesses. First, Venezuela was separated from the viceroyalty of New Granada, a sprawling region that originally reached from the Pacific to the Atlantic over the northern territories of South America; next, an intendant was installed in Caracas to administer economic affairs, and a captain-general to rule over political and military matters. With a direct umbilical to Madrid now, Venezuela began to suffer tighter restrictions on its ranches, mines, and plantations. The Council of the Indies, which governed the Americas from Madrid and Seville, strengthened its hold. Taxes were increased. A ubiquitous imperial presence was felt in all transactions. The Guipuzcoana Company, a powerful Basque corporation that monopolized imports and exports, was reaping great profits on every sale.

If Don Juan Vicente feared the impact of these new regulations, he saw that the blow would be more than financial. Creoles were being squeezed out of government roles. Throughout the Spanish Americas, from California to Buenos Aires, Spain began appointing only peninsulares—those born in Spain or the Canary Islands—to offices that decided important affairs. This was a sweeping, ultimately radicalizing change, reversing a culture of trust between Creoles and Spaniards that had been nurtured for more than two hundred years. In Italy, an exiled Peruvian Jesuit priest, Juan Pablo Viscardo y Guzmán, wrote angrily that it was tantamount to declaring Americans “incapable of filling, even in our own countries, places which, in the strictest right, belong to us.”

The most infuriating aspect of this for Creoles such as Don Juan Vicente was that the peninsulares being assigned the highest positions were often inferior in education and pedigree. This was similar to a sentiment held for years in British America. Both George Washington and Benjamin Franklin had registered strong objections to preferences given to British-born subjects when it was clear that the American-born were far more skilled. In the Spanish colonies, the new emissaries of the crown were largely members of Spain’s middle class: merchants or midlevel functionaries with little sophistication. As they took over the most coveted seats of power, their inadequacies were not lost on Creoles who now had to step aside. In Spain, not everyone was blind to the implications. A Bourbon minister mused that colonial subjects in the Indies might have learned to live without freedoms, but once they acquired them as a right, they weren’t going to stand by idly as they were taken away. Whether or not the court in Madrid understood the ramifications, Spain had drawn a line in the sand. Its colonial strategy shifted from consensus to confrontation, from collaboration to coercion; and to ensure its grip on the enormous wealth that America represented, it put a firm clamp on its laws.

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by Joel | 14 February 2022 · 8:23 am

Japan’s Home Front, 1941

From Storm Clouds over the Pacific, 1931–1941, by Peter Harmsen (War in the Far East, Book 1; Casemate, 2018), Kindle pp. 253-256:

What kind of nation was Japan in 1941? Who were the 73 million people that would soon find themselves in the most devastating war in their island nation’s long history? Foreign affairs writer Henry C. Wolfe visited Tokyo in the fall of 1941 and was shocked by the gloom and dreariness of life in the once vibrant city of 6.5 million inhabitants. Four years of war and accompanying austerity had turned it into a “capital of shadows” with long lines of customers waiting in front of stores selling low-quality products made from ersatz material. Shoes of real leather could not be found. Clothes were made from a little cotton mixed with bark and wood pulp and ripped easily. Wolfe described what happened when an American diner at a restaurant asked for a second helping of pudding, the only part of his meal that was somewhat palatable. The head waiter replied, “Do you want me to go to jail!”

Wartime regulations had started out in a small way. Local governments had introduced rationing of sugar and matches in 1939, and it had become a national policy in 1940. Since then official controls had exploded, and by the fall of 1941 more than 100,000 goods and services were being regulated. Energy shortages were particularly conspicuous. Many vehicles were converted to run on charcoal, although that fuel was also in short supply. Police were soon forced to stop all public vehicles from running between midnight and 5 am. Adding to the woes, trams and trains were overloaded with people, since cars that had broken down could not be repaired due to a lack of spare parts.

The American trade curbs worsened an already steep decline in the standard of living, but they did not cause it. The tougher conditions faced by the average Japanese were equally due to the priorities of the Japanese rulers, which allocated ever larger resources to military purposes, leaving the civilians to pay. The war in China had taken its toll. In 1931, military expenditures had taken up 31.2 percent of the government budget, but a decade later it had increased to a staggering 75.6 percent. Average wages dropped by more than 20 percent from the mid-1930s until 1941. Meanwhile, there was less and less to be had for the shrinking incomes. The light industrial sector, where consumer products were manufactured, saw its share of overall production drop precipitously over the same period.

The finer things in life were, of course, virtually non-existent. Dance halls had been prohibited, despite their immense popularity, along with most jazz performances. Foreign movies were strictly limited, and Japanese cinemagoers, who were once among the most ardent foreign fans of Hollywood and even copied manners and slang from major American releases, were now limited to grim German propaganda fare with titles such as Victory in the West. The lights were out, also, in a quite literal sense. In Tokyo’s Ginza shopping district, the famous glittering neon signs had been turned off to save electricity. Five-star hotels, too, were wrapped in gloom after they were urged to keep lighting at a minimum.

Miyamoto Takenosuke, vice director of Planning Board, argued that “the people should be satisfied with the lowest standard of living.” He went on: “The craving for a life of luxury must be abandoned. At this time, when the nation is risking its fate, there is no individual any more. What remains is the nation and the nation alone. The storm of economic warfare will become more furious. Come rain! Blow wind! We are firmly determined to fight against the storm.” Japan’s largest candy maker Meijing [sic] Confectionary Company chimed in with an ad campaign featuring the slogan “Luxury is the Enemy!” The National Defense Women’s Association also did its part in imposing wartime rigor, posting members on street corners to stop women who were dressed too extravagantly, passing them handbills with stern admonitions about the need for thrift in light of the national emergency.

At the same time, a thriving black market for regulated goods had emerged almost immediately, and a special economic police set up to rein in the activities made more than two million arrests within just 15 months. The vigorous law enforcement did not curb the illegal transactions, but simply encouraged them to be carried out in more ingenious ways. A modern historian gives an example of how it remained possible to trade coal at the black-market price of 1300 yen, well above the official 1000 yen price tag: “To secure the additional 300-yen profit without running afoul of the law, a vendor, for example, might arrange for a customer to ‘accidentally’ drop 3000 yen next to the vendor’s stall. He would then take the money to the nearest official who would instruct the buyer to pay ten percent in thank-you money (300 yen) to the vendor.”

Despite the hardship, the Japanese government pretended it was in a position not only to care for its own population but for the peoples of all Asia.

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by Joel | 21 January 2022 · 11:19 am

Japan’s Industrial Pollution in 1897

From Emperor of Japan: Meiji and His World, 1852–1912, by Donald Keene (Columbia U. Press, 2005), Kindle pp. 532-534:

Another internal matter that disturbed the emperor in 1897 and would have future ramifications was the copper poisoning caused by the mines at Ashio. On March 24 a cabinet committee was established to investigate the situation. The extent of the harm to the environment and the suffering of the inhabitants of the region could hardly be exaggerated. Fish had disappeared from the Watarase River and its tributaries. Innumerable dry and wet fields had been ravaged. In recent years there had been frequent flooding, and the damage increased each year. At every session of the Diet, [early environmental activist] Tanaka Shōzō (1841–1913), a member of the House of Representatives, described the terrible damage, appealing for preventive measures and relief. However, neither the government nor the mine owners did anything to help the people of the region, and it was feared they might stage a march on Tōkyō to appeal directly to the government.

Shortly before the investigating committee was established, the minister of agriculture and commerce, Enomoto Takeaki, traveled to Ashio in mufti to observe the effects of mineral poisoning. He was so shocked by what he saw that he resigned his post, taking blame for the disaster. The emperor was much upset when he was informed of conditions in Ashio, and on April 7, at his request, Tokudaiji Sanetsune sent letters to the governors of Gumma, Tochigi, Saitama, and Ibaraki Prefectures asking if they thought that the sudden spate of public criticism was occasioned by the damage caused by the flooding of 1896 or if it went back to 1892 and 1893 when the frightening effects of pollution were first discovered.

At the time some observers blamed the disasters on the indiscriminate felling of trees, resulting in landslides that filled the riverbeds. The rivers, unable to flow freely in their normal courses, had broken through the embankments and spread the poison in their water over the land. The governors were requested to reply without concealing anything and appending relevant documents.

As a result of the reports received from the cabinet committee, on May 27 [“Copper King”] Furukawa Ichibei, the operator of the mines, was issued a set of thirty-seven orders requiring him to provide settling ponds, filter beds, and similar facilities to prevent the mine water from overflowing and to eliminate smoke pollution. He was told that these improvements must be completed within 150 days and that mining operations would be halted until the settling ponds and filter beds were ready. In the event that Furukawa disobeyed these orders, he would be forbidden to engage in further mining.

On November 27 the cabinet, satisfied that the work of the committee investigating the mineral poisoning at Ashio was more or less completed, relieved the committee of its functions, and assigned to the appropriate ministries the supervision of preventive measures and restoration of affected land. Judging from the persistence into the late Meiji era of the issue of copper poisoning, it is obvious that the pollution controls ordered by the government at this time were not strictly enforced. The desire to build a modern, rich country was so strong that the Japanese tended to tolerate environmental pollution, even when it was as extreme as at the Ashio copper mines.

Eleven years earlier, in 1886, Suehiro Tetchō had published Setchūbai (Plum Blossoms in the Snow), a work often praised as the finest of the Meiji-period political novels. It is set in 2040, the 173rd year of the reign of Emperor Meiji, and opens with the sounds of cannons and bugles blowing to celebrate the 150th anniversary of the proclamation of the constitution. The accompanying illustrations depict the Tōkyō of the future. It is a city of grim rows of brick buildings from which innumerable tall chimneys emit black smoke. Tetchō wrote enthusiastically, “Telegraph wires spread like spiders’ webs, and trains run to and fro to every point of the compass. The electric lamps are so bright that even at night the streets look no different than in broad daylight.”

A reader today may shudder at the thought of a city so devoid of amenities and so tainted by industrial pollution, but Tetchō undoubtedly believed that his readers would be delighted by a future rich with the progress represented by chimneys belching smoke; he seems to have thought that the more Tōkyō resembled London, the greatest of the Western cities, the happier the Japanese would be. The chamberlain Hinonishi Sukehiro recalled:

Whenever His Majesty made a journey in the Kansai region, a little before the train passed Ōsaka he would say, “We’re getting close to the smoke capital…. Now we’re in the smoke capital.” Whenever we approached Ōsaka, he would look out of the window at the landscape. When he saw a great deal of smoke rising, he would be extremely satisfied.

For Emperor Meiji, no less than for Suehiro Tetchō, the “smoke capital” was a term of praise; but the copper mines at Ashio served as a grim reminder of the cost to the environment and to human lives of such progress.

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by Joel | 8 November 2021 · 5:15 pm

Amur River Boom and Bust

From The Amur River: Between Russia and China, by Colin Thubron (Harper, 2021), Kindle pp. 265-268:

The enormous silence of the river, its shrinking human populace and its virgin forest, give the illusion of return to some primeval Arcadia, of recoil from a stricken present. But to its inhabitants it means desolation. For almost four centuries the Amur has been the stuff of dreams, but also of promise forever delayed. In the mid-nineteenth century, especially, there arose in Russia a grand and delusive exhilaration. Just as in the seventeenth century the Cossacks were lured south by rumours of a Daurian river valley spread with wheat and sable-filled forests, even silver and precious stones, so the accession of the initially liberal Czar Alexander II, in an empire that had been stagnating for thirty years, released a groundswell of intoxicating hope. Momentarily Russia turned her back on Europe, with its old humiliations, and found a visionary future in Siberia’s east.

Suddenly the immense but little-known Amur loomed into brilliant focus. Here would be Russia’s artery to the Pacific, a titanic waterway flowing, as if by providence, from the belly of Siberia into an ocean of infinite promise. The trading concessions wrenched from China by the British and French, the prising open of Japan, and above all the arrival of a young and vigorous America on the opposite coast, would surely transform the Pacific into an arena of world commerce. Russians had watched the American advance westward with awe. It seemed to mirror their own headlong drive across Siberia to the same ocean, and now the two countries might flourish together in a shared oceanic commonwealth. There was even heady talk, in Siberia, of a political alliance.

With Muraviev-Amursky’s seizure of the Amur from a helpless China in 1858, the vision of an eastern destiny became euphoria. The Amur, it was declared, would become Russia’s Mississippi, and Muraviev was hailed, without irony, as ‘one courageous, enterprising Yankee’. Such dreams climaxed in the energies of the American entrepreneur Perry McDonough Collins, quaintly named his country’s ‘commercial agent’ on the Amur. ‘Upon this generous river shall float navies, richer and more powerful than those of Tarshish,’ he announced, and at its mouth ‘shall rise a vast city, wherein shall congregate the merchant princes of the earth’.

Even before Muraviev’s land grab, St Petersburg was rife with reports of foreign merchant ships making for the Amur. Soon a lighthouse at De Castries was raised to guide them. A fleet of steamboats began plying the once-quiet waters. The lower river valley was declared a free trade zone. And the fulcrum of these hopes was the newly founded port of Nikolaevsk at the Amur’s mouth, which Alexander and I were approaching on the lonely Meteor. For a few years German and American trading firms went up here, housed in stout log cabins with iron and zinc roofs. A library of over four thousand books was assembled, with recent Paris and St Petersburg newspapers, happily uncensored. The officers’ club flaunted a dining hall and ballroom. Life was reported delightful. The Nikolaevsk stores were selling Havana cigars, French pâté and cognac, port and fine Japanese and Chinese furniture. Susceptible minds twinned the town with San Francisco. And Perry Collins, of course, went further, looking forward to the day when St Petersburg itself would be replicated on the Amur.

Then, within a decade, harsh realities broke in. Far from being a riverine highway, the Amur was revealed as a labyrinth of shoals, shallows and dead ends, and for seven months of the year was sealed in ice or adrift with dangerous floes. Even cargo boats of low draught might not reach Khabarovsk, let alone Sretensk. And the river mouth offered no simple access. The straits between the mainland and the obstructing island of Sakhalin made for hazardous steering, especially from the tempestuous Okhotsk Sea. Ships sank even in the estuary. As for the Amur shores, for hundreds of miles they were peopled only by a sprinkling of Cossacks, natives and subsistence farmers, many forcibly settled on poor land, and open to the floods that still ravage it. For its inhabitants, this became a cursed river: not the ‘Little Father’ of Russia’s affection, wrote a dismayed naturalist, but her ‘sickly child’. The structures of commerce that worked elsewhere – the trading houses, the shipping agents, the free zones – had been imposed upon an indifferent wilderness. In the simple, brutal realization of those most disillusioned, there was nobody to trade with and nothing to trade. Within a few years the agents and flotillas were gone, transferring first to De Castries and then to the ice-free harbour of Vladivostok.

As for Nikolaevsk, even Collins had expressed misgivings. Its waterside was so shallow that ships had to drop anchor half a mile offshore, and their cargo was transported by lighters to a swampy coast. In winter the town was blasted by Arctic blizzards and lay sometimes six feet deep in snow. Even the reports of foreign commerce were exposed as delusion. The shipping had never been significant. Within a few years Nikolaevsk became a byword for boredom, immorality and petty scandals. In its celebrated officers’ club, remarked a worldly sea captain, the newspapers were few and several months old; it compared poorly to a low German beer house. The great explorer Nikolai Przhevalsky equated the whole place with Dante’s hell.

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Filed under China, economics, industry, migration, nationalism, Russia, U.S.

by Joel | 14 October 2021 · 5:36 am

North Korea’s Masters of Money

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 147-148:

Private property ownership is still technically illegal in North Korea, but that hasn’t stopped the emergence of a vibrant housing market. Sometimes people lease out the right to live in the apartments assigned to them by the state; at other times, masters of money sell the apartments they’ve been allocated in these new developments for substantial profits.

As a result, real estate prices have soared, with prices in Pyongyang increasing as much as tenfold. A decent two- or three-bedroom apartment in the capital costs up to $80,000, but a luxury three-bedroom apartment in a sought-after complex in central Pyongyang can fetch $180,000. It is an unimaginable sum in a country where the official government salary remains at about $4 a month.

Another reason for the real estate boom is the almost complete lack of a banking system. The masters of money can’t stash their cash in an interest-bearing account or investment fund, so they channel it into bricks and mortar.

Ri Jong Ho’s entrepreneurial good fortune began in the mid-’80s, when he began working for Office 39. By earning money for Kim Jong Il’s slush fund, he was enabling the Dear Leader to buy all that cognac and sushi. That made Ri an important person to the regime, and he lived a good life as a result.

His last job was in the Chinese port city of Dalian, not far from the border with North Korea, where he was the head of a branch of Taehung, a North Korean trading company involved in shipping, coal and seafood exports, and oil imports. He had previously been president of a ship-trading company and chairman of Korea Kumgang Group, a company that formed a venture with Sam Pa, a [notorious] Chinese businessman, to start a taxi company in Pyongyang. Ri showed me a photo of him and Pa onboard a private jet to Pyongyang.

As head of the Dalian branch of the Taehung export business, Ri would send millions of dollars in profits—denominated in American dollars or Chinese yuan—to Pyongyang. In the first nine months of 2014, until his defection in October that year, Ri said he sent the equivalent of about $10 million to the regime. Despite all the sanctions, the US dollar is still the preferred currency for North Korean businessmen since it is easiest to convert and spend.

It didn’t matter that there were supposedly stringent international sanctions in place. Ri’s underlings simply handed a bag of cash to the captain of a ship leaving from Dalian to the North Korean port of Nampho or gave it to someone to take on the train across the border.

But Uncle Jang’s downfall at the end of 2013 spooked many masters of money, including Ri. He and his family escaped from Dalian to South Korea and then eventually to the United States.

He clearly made a tidy sum of money for himself on the sidelines of his official job. The family lived a comfortable life in the Virginia suburbs. But even in the United States, Ri was cagey about meeting me and careful about what he said. “There are so many other stories, but I can’t tell you all them. Do you understand?”

He gives occasional public speeches about the North Korean regime—and much more private advice to the American government—while his children work on their English and study to go to an American university. They want Ivy League or, failing that, Georgetown.