Twentieth Century Chronicle

Page 222

When Nagata Tetsuzan left Minister Tamura's office, his mind was in turmoil. However, after returning home, he consulted some friends in the ministries and found that what Tamura said was not untrue. Within the army, there was both envy and jealousy towards the navy's extraordinary promotion of lieutenant colonel. After all, not everyone can earn medals while still in school, and no one has ever been promoted directly from lieutenant to lieutenant colonel after the army system was fully established, especially since they were reluctant to disclose their achievements.

Combining the information Minister Tamura had given him, Nagata Tetsuzan finally formed a relatively clear image of a genius general in his mind. The only thing he found hard to accept was that this genius general was the same age as him and did not come from a noble background. Nagata had always felt that he was an extremely outstanding person among ordinary people. Even though the Choshu faction controlled personnel in the military and demoted talented people like him to the lower ranks of the army, he was still able to change his fate by passing the entrance exam for the Army War College.

Among the 16th class of the Army Academy, he was among the first to be admitted to the Army University. For a busy officer attached to a squad, this was indeed a remarkable achievement. After all, it was much more difficult for officers attached to squads to get into the Army University than for provincial or ministerial officials. In terms of study time and teaching materials, officers attached to squads were at a disadvantage.

However, his experience pales in comparison to Lin Xinyi's. Unlike him, who desperately tried to prove himself within the rules, Lin Xinyi clearly broke the rules from the very beginning and forced the Navy to change the rules to prove his ability.

Nagata Tetsuzan put himself in Lin Xinyi's shoes. He thought that if he went to Northeast China after graduating as a non-commissioned officer and single-handedly started a major war between China and Russia in the Northeast, and defeated the Russians in the war, then the army would indeed have to acknowledge its ability and achievements. Otherwise, it would be difficult to face the doubts of the people. The people paid so much tax money to support the army, but the performance of this army was not as good as that of a single soldier. Wouldn't this mean that the high-ranking officers of the army were a bunch of useless people?

However, after careful consideration, Nagata Tetsuzan finally admitted that he did not have the ability. Putting aside how to get the Chinese to obey him and fight the Russians, how could a backward Chinese armed force defeat the powerful Russian army without the support of external resources? Even if he were in Lin Xinyi's position, he could not imagine how he could defeat ten or even dozens of times the size of the British army in Tibet and India. Although the British army was not as capable as the Russian army on land, it was still a European-style army.

The joy of being admitted to the Army University was immediately extinguished in Nagata's heart. Just as Minister Tamura said, there was indeed a peak that was difficult to climb in front of him. If he could not improve himself, then even after graduating from the Army University, he would still be shrouded in the shadow of this mountain.

On the other side, after Lieutenant Nagata left, Hongo Fusataro also asked Tamura, "Do you really think these young officers can become Hayashi Shin'ichi's opponents? He seems to have become our opponent now."

Major General Hongo was not from Choshu. His fellow soldiers were Uehara Yusaku and Akiyama Yoshifuru, and they had always belonged to the neutral faction. However, after Tamura saw that the pan-Choshu faction could not be maintained, he began to win over the neutral faction in an attempt to reorganize the pan-Choshu faction and make himself the leader of the neutral faction. As a result, his relationship with Hongo became closer.

In response to Major General Hongo's doubts, Tamura shared some of his thoughts: "You're right. In fact, Lin Xinyi has already become our opponent, rather than leaving it to them to fight. However, we need to cultivate young officers to support us. It's better to fight against the Navy in the name of opposing the Choshu faction than to raise the banner of opposing the Choshu faction."

Besides, given Lin Xinyi's age, he'll inevitably run into Nagata and the others once they've matured. Giving them a heads-up beforehand isn't a problem. I don't think we can suppress this rising star in the Navy. The Navy's current scheme shows that his position is already secure; getting the Navy to abandon him will be very difficult.”

Hongo Fusataro was speechless. Tamura's words did make sense. Although they had no evidence, and the Navy's current strategy was entirely led by Hayashi Shinji, once other options were ruled out, this was the most likely reason. Tamura's judgment in this regard was at least not too far off.

After a long silence, Hongo finally said, "In any case, at least we've managed to get through this military downsizing case without any major incidents. From this perspective, the Navy's plan wasn't entirely detrimental to the Army's interests."

Tamura glanced at Hongo, ultimately suppressing his urge to speak his mind. In his view, this was actually the most worrying aspect: the Navy was essentially slicing sashimi. It was said that the best chefs could remove all the flesh from a fish, yet the fish would still be able to react. The Navy's current strategy was exactly that: the Army's interests were being harmed, but not enough to incite rebellion within the Army. If this continued, the Army might become that fish, still breathing even after being sliced ​​clean—a very bad omen.

Of course, from their group's perspective, the navy's strategy actually gave them a boost. This way, the troop reduction plan wouldn't be seen as him betraying the army, but rather as a temporary act of forbearance for the country. Thus, the Choshu faction's plan to make him bear the brunt of the army's anger caused by the troop reduction failed, and he, as the Minister of the Army, wouldn't be immediately thrown out to fend off the discontent of the soldiers.

Tamura helplessly discovered that he couldn't devote all his energy to dealing with the navy's attack on the army. After the military downsizing plan, his first challenge was the Choshu faction's attack on him. After all, the Choshu faction didn't genuinely want him to sit in the minister's position; they just wanted him to take the blame. If he successfully weathered the storm, the Choshu faction would have to personally remove him from office, otherwise their control over the army would be lost.

Tamura brought Nagata and the other graduates of the 23rd class of the Army War College together to deal with the Choshu faction's counterattack. He was well aware that, in terms of the current power structure, the Choshu faction still held the advantage. Even though he was the Minister of the Army, the Choshu faction still controlled the positions of Director-General of Education and Chief of the General Staff, and there was also the veteran Yamagata suppressing the army.

Of course, the Choshu faction was not invincible. Its biggest weakness was the lack of successors. After Yamagata and Katsura Taro stepped down from the center of power, the young Choshu officers, represented by Tanaka Giichi, were simply unable to control the situation. Therefore, the struggle with the Choshu faction mainly involved a stalemate. As long as Tamura could maintain his footing, time was on his side. The young officers were primarily anti-Choshu, and once they matured, they would undoubtedly become Tamura's asset.

Looking out the window at the gloomy, leaden-gray clouds, Tamura couldn't help but sigh, "Looks like it's going to snow again. I wonder when this winter will be over..."

Contrary to the atmosphere of uncertainty within the army, political and economic figures in the government, business, and industry finally emerged from the shadow of the Hibiya Incident, as they sensed the arrival of a new economic boom. Both the Sino-Japanese War and the Russo-Japanese War brought about a wartime boom, but both were followed by periods of economic recession to varying degrees afterward.

This peace in East Asia has brought a surge in Asian cooperation, marking the first time Japan has experienced an economic boom outside of war. The previous real estate development in Tokyo, affected by the war, did not bring any benefits to areas outside Tokyo, making it difficult to call it a true boom.

However, this time was different. The prospect of East Asian cooperation stimulated new investments in industries by major conglomerates. This meant that although the Russo-Japanese War had ended, the scale of investment in Japan's modern industrial sector did not decline significantly. Furthermore, the land reform in Chiba Prefecture and the construction of the Chiba Prefecture Heavy Industry Center greatly stimulated capital investment in real estate in Chiba and the Tokyo metropolitan area. This round of investment did not only benefit the real estate industry; other modern industries also benefited. Therefore, it marked a new period of economic prosperity for the Japanese economy.

The capital investment brought about by East Asian cooperation has several main aspects in terms of economic prospects. One is the inclusion of the Korean Peninsula in Japan's economic and trade sphere, which has enabled Japanese industries to expand their markets. Another is the joint negotiations between Japan, China, and India on coal and iron ore projects, which has generated great expectations among Japanese industries for the Asian common market.

Driven by these expectations, Japanese conglomerates naturally increased their investments in modern sectors to provide the necessary production capacity for market expansion. Among them, the first to benefit were a series of companies led by the Kawasaki and Shibusawa groups. These companies were the first to be incorporated into the Sino-German Industrial Standards Alliance and began to establish unified industrial standards.

Prior to this, only a few industries in various countries had begun to adopt unified standards. The United States was the best at this, as it focused on large-scale industrial production and was therefore extremely proactive in establishing unified industrial standards. For European countries, however, different industrial standards became market barriers, used to prevent competitors from entering their markets. Therefore, Europeans were not as enthusiastic about establishing unified industrial standards.

So what are the benefits of standardizing industrial standards? While on the surface it seems that industrially underdeveloped countries are forced to open their markets to industrially advanced countries, in reality, these countries also gain the ability to absorb the low-end industries of industrially advanced countries. For example, after Wuhan established an industrial standards alliance with Germany, although German exports to China rose rapidly, Wuhan's industrial development also quickly surpassed Shanghai's, making it the first city in China to exceed $100 million in industrial output.

Before 1902, Wuhan's industrial output was only about one-third that of Shanghai. However, by 1908, Wuhan's industrial output was three times that of Shanghai, with heavy chemical industry accounting for more than half of that. This speed of industrial development broke the historical record of late-developing industrial countries in Europe and America. The realization of this speed of development was due to three key factors: the demand for heavy chemical industry brought about by the war, the centralized application of electricity, and the unification of industrial standards.

After the Kawasaki and Shibusawa groups joined the Sino-German trade circle, these Japanese companies immediately felt the huge demand for industrial products in the Wuhan area. The only obstacles hindering their entry were settlement and meeting the industrial requirements of the Chinese market. In fact, some Japanese business leaders believe that the Sino-German trade circle extends beyond the Chinese market. Because, according to German standardized industrial practices, Japanese companies can actually participate in the manufacturing process of German industrial products, thereby joining Germany's global trade.

The examples cited by these Japanese business leaders are some of the German industrial orders undertaken by Chinese companies, such as Continental Tires and German dye and chemical plants. Germany does not have rubber plantation bases, so establishing tire factories in China, which is close to Southeast Asia, a major rubber plantation base, can greatly reduce production costs. Although China's coal mining industry is not developed, China has abundant coal reserves. Once developed, China's coal chemical industry can also develop rapidly.

Therefore, relying on these two raw materials, German entrepreneurs transferred this part of the industry to China, then imported these industrial products from China to offset the investment in factory construction, and then obtained excess profits from trade. This model has initially proven effective, so the Germans are increasing their investment in Wuhan. Japanese entrepreneurs believe that Mindanao, which is occupied by Japan, is suitable for rubber cultivation, and there is no reason for the Chinese to enjoy this profit; Japan is actually more suitable to take over this industry. Therefore, the search for a new position for the Japanese economy in the Sino-German trade circle has become a hot topic of discussion in the Japanese business community at the end of 1908.

Chapter 713

Author: Fuchun Mountain Residence Number: 4997 Comments: 0 Update Date: 2023-08-22 12:36:26

While the recruitment by the Veterans Affairs Bureau caused a stir, the military downsizing plan proceeded smoothly and formally. The army ultimately retained its pre-war 17th Division structure, which was not a bad result, at least better than the Navy's proposed 15th Division plan. Of course, this was also a suggestion made by the Imperial Household Agency to Prime Minister Yamamoto in order to quell the military downsizing plan as soon as possible.

Although it only involves the disbanding of two wartime divisions, each division, with its 900-plus officers and 1000-plus sergeants, forms the core of the military. Disbanding two divisions doesn't mean retiring 30,000-40,000 soldiers; it means truly losing 3,000-4,000 core personnel. These 3,000-4,000 core personnel have their own comrades and superior-subordinate relationships, so if these people aren't properly resettled, the disbanding will cause chaos.

While the establishment of the power grid company solved the problem of leaving the military for some officers, some soldiers did not actually want to leave the army. They felt that they had been studying military affairs since childhood and did not know what to do after leaving the army. Even if a power grid company could take them in, they would lose their value in life. Naturally, they were the most steadfast anti-military retreaters.

For this group of people, Tamura ultimately decided to adjust the organization of the retained 17th Division, reducing the number of soldiers and increasing the proportion of officers, thereby dispersing some officers who were unwilling to leave the army to other divisions to serve as deputy commanders. Although this could not satisfy everyone, it at least met the minimum requirements of the officers who were unwilling to leave the army.

Thus, the demobilization of the army finally made progress. The conflict between the government and the military was somewhat eased. By the end of December 1908, the Japanese political scene finally showed some signs of stability, no longer as turbulent as it had been at the beginning of the year.

For Lin Xinyi, he finally enjoyed his first relatively uneventful year-end after returning to Japan. The power structure within the navy was beginning to take shape. Although the reformist group had not yet truly won over the hearts of the lower and middle ranks of the navy, the factional struggles at the upper ranks of the navy had at least come to an end. Therefore, he had nothing to be nervous about regarding naval affairs. Although Yamamoto Gonnohyōe had asked for his opinion on the military downsizing plan several times, Yamamoto himself did not want to have too much contact with Lin Xinyi. After all, Yamamoto was a politician with his own political ideals, so after the military downsizing plan was settled, Yamamoto stopped contacting him.

So Lin Xinyi took advantage of the free time at the end of the year to complete the important task of moving into a new house with his wife. If it were a traditional Japanese wooden house, a house would actually be built in less than three months. Based on the records of many fires in Edo, Tokyoites had a very simple process for building houses, ensuring that people could move into new houses one or two months after a fire.

Of course, this kind of traditional Japanese house was unacceptable to Lin Xinyi, because it was just a wooden shack that served no purpose other than providing shelter from the wind and rain. For a modern person, running water, drainage facilities, and electricity are the most basic living conditions; he didn't even require communication, since even tycoons rarely have the opportunity to make phone calls these days.

So at Hayashi Shin-yoshi's request, this two-and-a-half-story building in Nagasaka-cho took almost a year to build. Although it took so long, it still met Hayashi Shin-yoshi's basic requirements. The total cost was 1300 yen. According to the construction company, a typical detached house like this would cost at most 800 yen, including the land price.

Ordinary government officials earn an annual salary of 600 yen or more, so it's not too difficult for them to buy land and build a house in Tokyo. Skilled workers earn about 240 to 300 yen a year, and with some effort, they can own a house in Tokyo. However, ordinary workers earn only a little over 100 yen a year, and for them, owning a house in Tokyo would require almost a lifetime of savings.

As land prices in Tokyo continue to rise, the hope of ordinary people owning a home in the city center is becoming increasingly slim. In reality, Hayashi Shin-yi's expenses were far less than his actual costs. One reason was the cost of the road and electricity lines to his house, which were originally the residents' responsibility. However, Shibusawa Eiichi instructed the construction company and Tokyo Electric Power Company to waive these costs. In other words, Hayashi Shin-yi only paid for the land itself; the additional expenses for the services he required were covered by the companies.

Faced with this kind of Eastern-style interpersonal relationship, Lin Xinyi could only sigh and say that the three countries of Japan, China, and Korea were truly like brothers in handling interpersonal relationships. If you concealed the names and locations, you really couldn't tell which country the incident actually occurred in.

Muzi was quite satisfied with her new home, not because Lin Xinyi had added many convenient amenities, but because she felt she finally had a place that truly belonged to her. Although Muzi usually told Lin Xinyi that wherever they were together was home, it was clear that her attitude towards her new home in Nagasaka-cho was different from her dormitory in Shinagawa. For example, she refused to hire a maid to help her with housework.

Before the advent of convenient household appliances, managing such a small house would have been too much for a single woman to handle. Moreover, Lin Muzi also had work to do with a women's magazine and a cultural foundation, making hiring a maid necessary. Lin Xinyi originally wanted to do what Shinagawa did and simply ask someone to find one; he felt it was just hiring a housekeeper and didn't need to be so serious.

However, Mu Zi clearly didn't see it that way. She disagreed with Lin Xinyi's nanny theory, believing that maids were also part of the household. In the Edo period, there was even a custom of masters providing dowries for their maids, indicating that the relationship between them wasn't simply a monetary one. Faced with Mu Zi's traditional thinking, Lin Xinyi found it difficult to say anything.

Of course, at Mu Zi's insistence, the two were able to enjoy some rare time alone after moving to their new home. Mu Zi quite enjoyed this time together. After asking Lin Xinyi if he was going back to his hometown for the Lunar New Year, she suggested that they just stay home for the holiday. After all, Mr. Xiao Chuan was going back to his hometown for the New Year, and Mu Zi didn't want to have too close a relationship with her family from the past. The two of them didn't have any close relatives to visit in Tokyo, and they would contact others after three days of the New Year.

Although the two didn't plan to go out for the New Year, they did write quite a few New Year's greetings, spending almost all of the last few days of the year at home writing them. To Lin Xinyi's surprise, Matsukata Kojiro suddenly came to visit him with gifts the day before the New Year.

As Lin Xinyi led Matsukata Kojiro into his home, he asked curiously, "Mr. Matsukata should be very busy at this time, so why did you come here?"

Matsukata Kojiro knew why Hayashi Shin-yi was puzzled. After all, Hayashi Shin-yi had paved the way for him. He had already achieved the merit of negotiating cooperation with China. As long as he won over the support of the financial and economic circles, he would be the only candidate for the new Minister of Commerce and Industry after the separation of the Ministry of Agriculture and Commerce.

Lin Xinyi had fulfilled all his promises, but only when he reached this point did he realize that what he thought was not a problem was actually hindering his progress. If this prevented him from becoming a minister, the problem was frankly his own, not Lin Xinyi's. However, he had no other choice but to seek Lin Xinyi's help.

Therefore, after Mu Zi served tea and snacks and left the study, Matsukata Kojiro, disregarding his pride, hurriedly confessed to Hayashi Shinichi, "It's not that I don't want to visit those influential political and economic figures, but my elder brother told me to stay at home and forbade me from doing so. He said that as the eldest son of the Matsukata family, it's his responsibility to represent the family in visiting these people. Father hasn't said a word about it either. I think my brother has his eye on the position of minister; he wants it, he wants it..."

"Want to go down the mountain to pick peaches?" Seeing that Matsukata Kojiro couldn't express himself clearly, Lin Xinyi couldn't help but add a question for him.

Upon hearing this, Matsukata Kojiro nodded vigorously and said, "Yes, that's what the Chinese say, he wants to go down the mountain to pick the peaches. I never expected my father to be so biased. I worked so hard to build this situation, but when it came time to sit down, he kicked me out. I really have no other ideas, so I can only come to ask you for advice."

Lin Xinyi wasn't too surprised by this situation. Although Japan belongs to the Confucian cultural sphere, its inheritance system is actually closer to the European primogeniture system. To ensure that the family fortune isn't diluted, almost all the property belongs to the eldest son, while the other sons only receive a small share. Under this inheritance law, the eldest son, as the head of the family, has considerable power. Unless you sever ties with the family, you can only obey your elder brother's arrangements; otherwise, you won't even receive a living allowance.

Matsukata Kojiro is nominally the president of Kawasaki Shipbuilding, but in reality, he merely represents the Matsukata family in managing the company's shares. If he were to clash with his elder brother, he would lose his position as president. This is why Matsukata Kojiro is willing to take the plunge and follow Hayashi Shin'ichi; he clearly understands that Kawasaki Shipbuilding doesn't belong to him, but to the Matsukata family, to his brother's property. He's just drawing a salary there. Only if Hayashi Shin'ichi succeeds in securing the position of Minister of Commerce and Industry will he be able to break free from the Matsukata family and possess something truly his own.

However, it now seems that Matsukata Iwao was unwilling to let his younger brother take the lead, or perhaps the position of minister was a considerable temptation for him, so he resorted to brute force to seize it. Although this seems quite unfair, it is indeed in accordance with the rules in Japan, since Matsukata Iwao was taking away his younger brother's claim to the Matsukata family, which was precisely his right as the eldest son.

Looking up at Matsukata Kojiro, I noticed that the other man's eyes were a little dark, obviously he hadn't rested well. It was clear that this matter had put a lot of pressure on him, which was why he was so eager to come to me for advice.

After a moment's thought, Lin Xinyi knew that supporting Matsukata Kojiro was far more advantageous than supporting Matsukata Gen. After all, Matsukata Gen had Matsukata Masayoshi backing him and didn't need to give him much face. If Matsukata Gen became Minister of Commerce and Industry, he might not support the political reform movement. Matsukata Kojiro, on the other hand, could only get the position of minister by relying on them and could only keep the position by relying on them. He was the Minister of Commerce and Industry who was the right fit for the reform group.

However, he still showed a troubled expression and said, "Mr. Songfang, it's not that I'm unwilling to support you, but this is ultimately a matter for the Songfang family. If I get involved, the Songfang elders and the president of Songfang will probably be unhappy, and you might not even be grateful to me in the future."

Matsukata Kojiro paid no attention to anything else; he only realized that Hayashi Shinichi seemed to have a way to turn his current unfavorable situation around. Therefore, he firmly assured Hayashi Shinichi, "As long as you help me get the position of minister, I will do whatever you ask me to do. Even if my brother and father have any complaints, I will never implicate you."

Since Matsukata Kojiro had made it clear that his father and brother had broken off relations, Lin Xinyi stopped being mysterious and said, "Actually, the key to this matter is that you need to make everyone believe that it was you, not the Matsukata family, who facilitated the economic cooperation between Japan and China."

There's a Chinese saying: "The affairs of the world boil down to two things: fame and fortune." Your elder brother can forbid you from visiting other important figures in the name of the Song family, but he cannot forbid you from expressing your views on economics in your personal capacity.

While Matsukata Genro's name commands respect in the business and economic circles, if it hinders others from making money, he loses his prestige.

So the key is to convince the business and economic communities that once you become Minister of Commerce and Industry, Japan's economy will enter a new phase of development that no one else can achieve. Once everyone believes this, then no one will support President Matsukata Isamu for the position.

After spending so much time with Hayashi Shin-yi, Matsukata Kojiro understood him better than anyone else. Hayashi Shin-yi's talents were not limited to military and political matters; he also had considerable insights into economics. For example, the Japan-China-India coal and iron alliance was Hayashi Shin-yi's masterpiece. Before Hayashi Shin-yi proposed this idea, no one in Japan had even thought of it. Everyone regarded China's heavy industry development as a threat to Japan.

So after Hayashi Shin-yi made his suggestion, Matsukata Kojiro did not hesitate to ask him, "Then how exactly can I convince the business and economic circles that only if I become the Minister of Commerce and Industry will Japan's economy improve?"

After a few seconds of contemplation, Lin Xinyi asked him in return, "What is your view on the gold standard?"

When asked about this, Matsukata Kojiro hesitated for a moment before replying: "The gold standard can curb inflation, which is a prerequisite for stable economic development. It was only after our country adopted the gold standard that the yen began to stabilize. And after the yen stabilized, social order began to improve. Therefore, the gold standard is not just a monetary policy, but also a national governance plan to maintain social order."

Of course, as you mentioned before, the gold standard system still had many drawbacks. On the one hand, countries with less gold reserves had to sell their own raw materials in exchange for gold in order to purchase necessary industrial necessities from abroad; on the other hand, developed industrial countries manipulated prices in underdeveloped agricultural countries through the international gold standard system, ultimately purchasing raw materials from these countries at market prices far below their value, thus creating predatory trade…”

Lin Xinyi was quite satisfied with Matsukata Kojiro's answer. Since Japan adopted the gold standard, Japan's elites had regarded it as the cornerstone of the country's economy, believing that breaking the gold standard would inevitably lead to the bankruptcy of the national economy.

Lin Xinyi believes that, on the one hand, these elites were frightened by the inflation in Japan before the First Sino-Japanese War, and on the other hand, the gold standard system was actually in the best interests of the propertied class. Therefore, the Japanese elites became increasingly fascinated with the gold standard system.

Before meeting Hayashi Shin'ichi, Matsukata Kojiro was an unwavering supporter of the gold standard, after all, Matsukata Masayoshi rose to power by curbing inflation and establishing the gold standard. As Matsukata Masayoshi's second son, Kojiro naturally wouldn't question his father's achievements.

However, in order to promote economic cooperation between Japan and China, it is necessary to question the international gold standard system. As Lin Xinyi emphasized, if Asian intra-Asian trade is settled according to the principle of the international gold standard, then Asian intra-Asian trade is still essentially subordinate to European international trade. The scale of this trade will ultimately be limited by the amount of gold. For Asian countries, maintaining trade with Europe is the most important responsibility of gold. On the contrary, it is not a big problem if the scale of Asian trade shrinks a bit.

The main reason for this situation is that Asia lacks an advanced industrial nation. To avoid invasion from elsewhere, importing military equipment and industrial machinery from Europe is inevitable. This defense need cannot be met through intra-Asian trade. Even Japan, Asia's only major power, cannot support the defense needs of other Asian countries with its industrial capacity.

Therefore, intra-Asian trade was at a lower level than Eurasian trade. If the goal was to expand intra-Asian trade, it was necessary to avoid using gold for international trade settlements. This is why the international gold standard was questioned. Matsukata Kojiro, in order to promote economic cooperation between Japan and China, had to accept this view.

Lin Xinyi then took the opportunity to express his stance on monetary policy to Matsukata Kojiro: "I believe the main factor driving continuous capital investment is the need for capital to multiply itself, and secondly, it is to combat inflation. That is, under moderate inflation, the earlier one invests in production, the higher the profits will be from subsequent production..."

Chapter 714

Author: Fuchun Mountain Residence Number: 5133 Comments: 0 Update Date: 2023-08-23 11:40:13

If Lin Xinyi were merely discussing how inflation could encourage capital to continuously expand production, then Matsukata Kojiro would have listened without really listening, because the best way to combat inflation is still the gold standard. Investment and expanded production can reduce debt through currency devaluation, thereby resisting inflation. However, there is a big problem here: the produced goods must be sold to bring back paper money, and then creditors must accept the paper money as legal tender before the debt can be eliminated.

However, Japanese capital today cannot actually guarantee stable sales by expanding production, because the domestic market in Japan does not have such a large consumption capacity, and it cannot compete with European goods abroad. Therefore, apart from the military industry procured by the state, whether other modern industries can recoup their investment depends entirely on luck.

In contrast, exchanging paper money for gold to combat inflation was the simplest and most effective method. The gold standard was the international settlement currency jointly maintained by advanced industrialized countries in Europe, which meant that as long as you had gold, inflation in Japan would not affect you. This was the foundation for the steady development of the Japanese economy after the establishment of the gold standard.

As the son of Matsukata Masayoshi, Matsukata Kojiro had considerable faith in the gold standard system established by his father, believing it to be a stabilizer for the Japanese economy. He reasoned that if the gold standard were abandoned, the zaibatsu might not invest their money in production, but would instead convert it into gold reserves. With currency depreciating and gold appreciating, the profits from capital invested in production would ultimately be less than those of the zaibatsu who held gold reserves.

However, as a successor of socialism who has experienced the historical cycle of the development of capitalism with Chinese characteristics, Lin Xinyi is obviously more aware than Matsukata Kojiro of how to solve the series of problems brought about by mild inflation. He then focused on explaining this: "...Of course, if the country only increases the money supply to create mild inflation to stimulate investment, but the market size does not expand significantly, then this inflation will continue to accumulate and eventually become hyperinflation. This is the situation that our country encountered before the establishment of the gold standard."

From the perspective of the economic situation at the time, the gold standard system established by Matsukata stabilized the Japanese economy after hyperinflation, thereby restoring the credibility of the yen. This prevented the national economy from collapsing. Therefore, the gold standard system was indeed a good economic control tool for a country with relatively stable markets.

So how do we transform newly issued paper money into a currency trusted by the people, rather than diluted with water? The answer is actually only one: ensure the purchasing power of paper money. The gold standard became an internationally recognized settlement currency because of the productivity of the advanced industrialized countries of Europe.

More than 100 years ago, before Europe entered the Industrial Revolution, gold and silver were the common currencies for international trade settlements. In Asia, silver was more widely used as currency. In order to import spices, tea, porcelain and other goods from the East, Europe had to collect silver and transport it to the East. It was this huge trade deficit between East and West that led Europe to eventually establish the gold standard.

After Europe entered the Industrial Revolution, the advanced industrial countries in Europe quickly absorbed huge amounts of silver from the East thanks to their ever-increasing productivity. So why do European countries no longer recognize the monetary value of silver? The reason is actually quite simple: once silver is monetized, it will prevent European countries from plundering excess labor from the less developed countries in the East through the gold standard.

European countries defined the value of human labor in gold, while Eastern countries defined it in silver. Therefore, forcing Eastern countries to accept the gold standard was essentially acknowledging that the value of human labor in less developed countries was unequal to that in developed countries. This was because the exchange rate between silver and gold was formed under the long-term huge trade deficit between East and West, and did not represent the true exchange rate between gold and silver.

The inflated value of gold in trade meant an inflated value of labor in advanced industrialized Europe. This explains why workers in the US and Japan, performing the same tasks with the same time and output, received vastly different wages. Therefore, while Japan appeared to be a gold-standard nation, it was in reality a backward agricultural country subordinate to the gold standard. The value of labor in Japan was still actually priced in silver, only gold was used as the denominated currency for settlement.

For Japan to become a true gold standard nation, the yen's credibility must be maintained by the productivity of modern industrial development—meaning that it should be able to purchase all necessary goods with yen, rather than needing to exchange it for gold to import from European countries. The pound sterling, the mark, the franc, and the dollar—these are the currencies of true gold standard nations because they can all be used to purchase virtually any consumer good within the country.

Compared to the currencies mentioned above, the Japanese yen is merely a unit of account used domestically in Japan. No matter how much we emphasize the amount of gold contained in each yen, foreign merchants still require gold, not yen, for settlement. Therefore, if we want the yen to become a truly universal currency, we must back it with modern industrial productivity.

So the question now becomes how to develop the productivity of modern industry. Solving this problem requires two essential conditions: continuous capital investment to expand production and the creation of a consumer market.

The British Industrial Revolution was achieved by solving these two problems. The expansion of overseas colonies brought Britain a steady stream of gold and an ever-expanding consumer market. Therefore, the British Industrial Revolution was essentially built on its global colonial system. The Industrial Revolutions of almost all European industrialized nations were linked to their respective colonial systems.

However, after China signed the Boxer Protocol, there were no longer any uncolonized, backward agricultural regions in the world. What remained were colonial imperialist powers with a certain degree of self-defense capabilities. Therefore, the colonial system that began with the Age of Exploration could no longer bring new gold and new markets to capital. Simply put, the colonial system could no longer meet the self-accumulation needs of capital.

For the ever-developing modern industrial productivity of today, the gold standard and colonial expansion have effectively reached their limits; they can no longer sustain this burgeoning capitalist monster. Although Japan ranks at the bottom among capitalist countries, and for Japan, capitalism has only just passed its infancy, it already faces the same predicament relative to the rest of the capitalist world.

It was precisely because Japanese capitalism faced a world that had already been divided up that the East Asian war broke out. The war between Japan and Russia was ostensibly due to the threat Russia posed to Japan's national security, but in reality, it was nothing more than a struggle between Japan and Russia for colonial power over Korea and Manchuria. The deeper reason was that established colonial empires like Britain and France opposed the new colonial empires that were shaking up the old colonial order.

Therefore, although Japan won the war, the benefits it gained were far less than the costs it incurred. This is the typical outcome of wars between colonial empires. Although the war was fought for interests, the industrial and military strength of the colonial empires themselves meant that the losses on both sides were far greater than those in colonial wars against less developed countries.

From these perspectives, we can conclude that the gold standard is not the core of capitalism; it is merely a monetary tool that serves capital. The core of capitalism is expansion. Once capital can no longer expand, it means that capitalism is in trouble, which is reflected in the economy as depression and a large number of unemployed people.

Therefore, Mr. Matsukata, if you want the support of people in the financial and economic circles, you must convince them that you can create a new market to accommodate their increased investment and expanded production capacity. Once capital appreciation is achieved, these people will support your theory of moderate inflation, and naturally, they will not support President Matsukata Yan, who emphasizes the margin standard.

Matsukata Kojiro was a bit overwhelmed. He really couldn't understand Hayashi Shin-yi's theory that the core of capitalism was expansion. Although he had also studied abroad, he didn't rely on studying abroad to get ahead. So, during his studies abroad, he enjoyed the European lifestyle rather than desperately absorbing European economic theories. After all, he hadn't thought about inheriting the Matsukata family business at the time.

Because of his conservative approach during his studies abroad, Matsukata Kojiro didn't really study European economic theories. He focused more on practical operational methods and organizational models. He had certainly heard of the labor theory of value, but that was all. Therefore, when faced with Hayashi Shin-yi using the labor theory of value to explain the economy and formulate economic development policies, he felt a splitting headache.

However, Matsukata Kojiro had received a European university education, and although he wasn't sure if Hayashi Shin'ichi's deductions were reasonable, they didn't seem to have any major logical flaws. So after thinking for a while, he simply stopped trying to figure it out himself and directly asked, "Then how do we create a new market?"

Lin Xinyi didn't mince words. Without hesitation, he said, "This cooperation between Japan, China, and India to transfer American steel production capacity is essentially creating a new market."

I imagine you heard while you were in Wuhan that the Chinese are considering using international capital to develop the land and resources of Mongolia, Manchuria, and Outer Northeast China. For capital, this development plan is creating a new market. To develop these areas, a large number of people will inevitably need to be relocated. These people will need to establish farms, cities, mines, and forests in the wilderness, which will require a large influx of industrial products from outside.

A simple look at the history of the development of the American Midlands reveals that the process of transforming nature is essentially creating a completely new market. In the past, Native Americans viewed the North American prairie as a hunting ground and a place for free migration; for capital, it was essentially a wilderness devoid of consumer power. However, as white settlers migrated to this prairie and established farms and ranches, it transformed into a stable new market for consumer industrial goods. The development of American industry was a byproduct of the colonization and transformation of the North American continent.

Therefore, the key to creating new markets lies in developing natural resources, transforming the natural environment, and turning agricultural areas into industrial zones. Taking China's development of its northern wilderness as an example, there are still many underdeveloped regions in the world that need development and growth.

For example, in South America, after being colonized by Spain and Portugal, the local indigenous civilizations were transformed into the current landowning estate economy. However, compared to South America's abundant natural resources, the landowning estate economy only utilized a negligible portion of the land, and a large amount of natural resources remained in their original state.

If we try to develop South America's natural resources in the manner of European colonialism, we will inevitably face resistance from the local people and suppression from European colonial empires. However, if we develop South America's economy with a cooperative mindset, we can gain the support of the local people. This is similar to how China and India were willing to accept Japan's participation in the coal and iron industry.

Therefore, the cooperation matters you discussed with China and India in Wuhan this time are not a past achievement, but the beginning of a series of international collaborations. You must convince Japanese politicians and economic figures of this, so that President Matsukata cannot attribute the credit for this Japan-China-India cooperation to the Matsukata family, because he cannot lead the subsequent international cooperation plans.”

Lin Xinyi's answer finally moved Matsukata Kojiro. This was the very point he had been asking for advice on today: how to distinguish himself from the Matsukata family. If he had been proud of the Matsukata family before, now, in this moment of competing for the position of minister, the Matsukata family had become a burden to him, because his elder brother was trying to attribute the credit to the Matsukata family and treat him as a tool representing the Matsukata family.

Once this image is accepted by the outside world, then his efforts in Wuhan will have been in vain, because everyone will think that this was a plan implemented by Matsukata's second son as his representative, and that the real driving force behind Japan-China cooperation is the Matsukata family, not him.

With Matsukata Kojiro, Matsukata Ichiro could then naturally take over the separation of the Ministry of Agriculture and Commerce and promote himself to the position of Minister of Commerce and Industry.

Matsukata Kojiro knew that if those political and economic figures had to choose between the Matsukata family and him, they would most likely choose the Matsukata family. This was because the cooperation had come to an end, and his role had been greatly reduced. The Matsukata family, as a major force in the Japanese political and financial circles, would not lose its influence on Japanese politics and economy. Weighing the options, they would naturally choose the more valuable Matsukata family over him.

He sought advice from Lin Xinyi because he had no other choice. Only Lin Xinyi, who disregarded the Matsukata family, would encourage him to turn his back on the Matsukata family and join the negotiations. As for the others, after the Matsukata family changed their stance on Japan-China cooperation, they no longer had much opposition to them.

Lin Xinyi's words did indeed reassure him. Although he was embarrassed to bring it up himself, separating himself from the Songfang family and preventing his elder brother from interfering in his affairs was precisely the issue he wanted to learn from. Therefore, he took the opportunity to express his opinion to Lin Xinyi: "Indeed, on issues such as the gold standard and international cooperation, my opinions and those of my family are different. Of course, I support your view, not my father's position."

However, could you be more specific about the series of international collaborations you mentioned? Can our cooperation with South American countries really attract the same level of attention from political and economic figures as the recent trilateral cooperation between Japan, China, and India?

Lin Xinyi smiled slightly at him and said, "Japan is an island country, so the development of shipping is of great importance to our country. In my opinion, Japan's focus on railway construction is putting the cart before the horse. Although railway construction can also drive the steel industry, the market capacity for railway construction is ultimately limited given Japan's small land area."

The biggest benefit for Japan in this trilateral coal and iron ore cooperation is not the development of Chiba Prefecture as a heavy industrial center or trade cooperation with China and India, but rather the significant increase in the scale of maritime transport that the three countries' coal and iron ore projects will bring. Japan has limited coal and iron resources, while China, although possessing coal, has uneven distribution and low-quality iron ore. India, while having excellent iron ore, has poor-quality coal.