Socio-Economic History

Vol. 64, No. 1

Regional industrialization and its institutional and political implications

The purpose of the symposium was to inquire into the necessary conditions for the growth of industrialization in Europe, China and Japan. The main point to be discussed was the institutional and political implications of regional industrialization. Although industrialization started in England, it must be viewed as a dynamic process within a European context. The 'Chinese Empire' and the European 'States System' had a quite different effect on industrialization.

First, for the development of industrialization, the states system provided favourable conditions, while the empire provided adverse ones. The princes in Europe competed for ascendancy with each other and tended to provide favourable conditions for their subjects in order to increase the revenue for strengthening their military forces. Since the Chinese Emperor, lacking internal and external competitors, used both military forces and the cultural means for government, he did not have to concede to merchants or financiers to obtain revenue. He was thus incapable of providing such infrastructures as decent credit arrangement for the peasantry, and a judicial system to secure property rights and enforce the observance of contracts.

Secondly, under the distinct state power patterns, different credit systems developed. In China or in other areas outside Europe, the credit networks were formed among big merchants and financiers, but were scarcely developed among the commoners such as peasants and small craftsmen. In Europe, especially England in the eighteenth century, there was a mature credit system which made it possible for commoners to tie up capital in machines or mills, without collection over a certain period; investment of fixed capital was essential for industrialization. Individuals of various social status, including lesser merchants and manufacturers, drew and received inland bills of exchange. There was no real guarantee or formal process, however, that regulated the mechanism of credit in this period.

Thirdly, voluntary associations made amends for the unstable credit system. These were clubs which performed social functions as protection against adversity and had an elaborate system of reciprocal obligation. As members of the associations gained confidence, they could get short term loans, were allowed to postpone repayments and could find customers in the association.

The rise and development of the transborder industrial regions in Western Europe up to 1914: a case study of the Twente-Westmunsterland cotton industry and the iron and coal industry of Saar-Lor-Lux

From the beginning of the nineteenth century, several transborder regions developed along the national borders of the two great Western European powers of Germany and France, but also along the borders of nations such as the Netherlands, Belgium, Luxembourg and Switzerland, which were small in size but of importance to the European economy. These regions played significant roles in the industrialization process and later in assisting technological transfer and in the movement of entrepreneurs, capital and labour.

The object of this article is to clarify the rise and development of such transborder industrial regions by way of two examples: the cotton industry of Twente-Westmunsterland, and the iron- and steel-manufacturing and coal-mining industry of Saar-Lor-Lux.

In the former case, it was the cotton industry of Twente on the Dutch borders which first grew as a result of help from the state in order to supply colonial markets. But during the latter half of the nineteenth century, remarkable growth in the neighbouring markets of Germany encouraged the entry of Dutch entrepreneurs into the Westmunsterland, especially into Gronau. By the eve of the First World War, this district had developed into one of the five major cotton industrial regions in Germany.

In the Saar-Lor-Lux region too, diversified transborder industrial activities meant that the French, Belgian and German sides were closely linked up to 1871. After this it became more difficult for enterprises from either France or Germany to become active beyond their respective borders, but enterprises from neutral Belgium were still able to advance freely. Moreover, interdependence on raw materials such as iron ore and coke meant that economic inter-relationships did not entirely disappear.

The early phases of regional industrialization in the Berlin economic area, from the end of the eighteenth century to the middle of the nineteenth

"German Industrialization" had already begun in several regions before the creation of the unified Second Empire in 1871. In each region, the process was characterized by a combination of specific production factors and by a particular infrastructure. Although German "Partikularismus" is often thought to have acted as a serious obstacle to industrialization, from the middle of the nineteenth century it had a powerful influence on regional industrialization in such fields as railway building, locomotive manufacturing and technical education as a result of competition between different states.

This paper describes the pattern of regional industrialization in the Berlin-Brandenburg economic area, from the end of the eighteenth century to the middle of the nineteenth. In the first half of the paper, five funda-mental initial conditions for the start of industrialization are identified, along with additional conditions that were created by the early industriali-zation in this region. Further, in view of the scarcity of production data during this period, the overall speed of industrialization and the unbalanced growth of the various industries are estimated using statistical data with regard to the overall population and industrial employees.

In the second half of the paper, the process of early industrialization in this region is divided into two phases. The first period, from 1800 until 1837, is characterized by weak and retarded industrialization, while the second, from 1837 to 1849, is characterized by powerful and accelerating development. The prime reasons for this acceleration were the establishment of the Zollverein (Customs Union) and the start and rapid extension of the railway system in the Zollverein states. However, not all branches of industry enjoyed the same acceleration of growth. While the wider integrated market area and the railway network performed a kind of common defensive function against the area outside, industries within the Zollverein were exposed to severe competition over price and quality. Thus, through accelerated industrialization in the wider market, the old industries were replaced by new ones. For example, in Berlin, the textile industry, which had been dominant until the 1830s, declined, but newcomers, especially machine engineering and the ready-made clothing industry (Konfektion), became leading sectors of industry.

Regional industrialization in the Habsburg empire in the early nineteenth century: a case study of the development of the cotton industry

The industrialization of the Habsburg empire is characterized by its regional nature. In this article, I try to identify the special features of industrialization in Bohemia, Lower Austria and Vorarlberg through analyzing the development of the cotton industry in each region. In all three areas, the cotton industry was located in border zones, but differences appeared during the course of development.

In Bohemia, the proto-industrialization which began in the eighteenth century prepared the way for the mechanization of the cotton industry. As a result, high-quality Bohemian cotton goods were able to dominate the market. The growth of cotton manufacturing also stimulated the related industries of iron, coal and machinery industries. In the late nineteenth century, Bohemia became the most important industrial region in the Habsburg empire.

In Lower Austria, the investment activities of the nobility, and of Viennese and foreign merchants, played an important role. As early as the beginning of the nineteenth century, their lavish funding made it possible to establish a large-scale mechanical cotton-spinning factory. However, the cotton industry in this area began to decline in the latter half of the century because of delays in mechanization and the relatively poor quality of the cotton produced.

In Vorarlberg, the influence of the cotton industry in neighboring Switzerland played an important role in supplying capital, machinery, and expertise. The production capacity of the area was relatively small, but the quality was so good that it was very competitive on the domestic market, especially in Northern Italy. The industrial development of Vorarlberg was based on its cross-border economic relationship with Switzerland.

Investment activities in regional Japanese industrialization: the activities of men of property in local areas

The movement to establish modern enterprises in Meiji Japan was found in rural as well as urban areas. This was made financially possible through the willingness of men of property based in rural areas to invest their capital in such risky ventures. The purpose of this paper is to point out that the motivation behind these activities was linked to the existence of "local society".

First, about 250 major stockholders in Niigata prefecture were classified into four groups according to the nature of their stockholdings in 1901. This demonstrated that a significant number of men of property had invested their money in the high risk stocks of local enterprises. Next, case studies were made of two local entrepreneur families, the HAMAGUCHI and the SEKIGUCHI. Both families invested the capital accumulated through their family business of soy sauce brewing in new enterprises and businesses in their local area in the 1890s. In parallel with these business activities, they vigorously participated in local social and political activities. These case studies showed us that their investment activities were closely related to their social and political activities. As these activities were so interlocked in the local areas, we conclude that the existence of "local society", which recent historical studies show to have emerged in the latter half of the nineteenth century, encouraged men of property to invest in local enterprises.

"Local society as the spur to enterprise investment" is our contribution to the main theme of this symposium.

Akinobu KURODA
Traditional markets and institutions: a comparison of China, India, and Western Europe

Traditional markets can be classified into four groups, according to how they preserve local liquidity. The first group maintains liquidity through creating a local currency. Traditional China is a typical case. In market towns in rural districts, cash notes issued by local merchants circulated without any official permission.

The second group maintains liquidity through the frequent use of credit transactions. In medieval Western Europe, local market towns formed legal communities to make debtors settle their obligations. In the case of Colchester, some burgers used credit even in transactions of less than one shilling. Credit transactions made it possible to detach local liquidity from the movement of silver coins among feudal lords and cities.

While the second group created what is called inside money within their communities, the first group developed a local supply of outside money. The ample supply of local currency gave peasants of the first group easy access to local markets.

Traditional India belongs to the third group, which is a mixture of groups one and two. In Mughal India, the movement of silver coins among landlords and financiers coexisted with the circulation of small denomination currencies such as cowries or iron coins in local markets.

The fourth group is a combination of convertible money and barter transactions, as is found in early modern Poland, or in modern Bolivia. Nobles, landowners and big merchants accumulate silver and gold coins that are valid for foreign trade, while peasants barter for daily necessities without any need to use money.

As a rule, if peasants use the local market frequently, the market is more likely to develop an autonomous system of liquidity of its own accord. This was the case in China. However, the case of China also shows that a free market economy does not always lead to industrialization. In fact, it seems clear that in both Western Europe and Japan, limitations on the use of money, combined with the availability of loans within the local community, laid the basis for the accumulation of funds for local industrialization.