Up until around1900, industrial development took place under an almost neutral trade regime1. This was notnecessarily desired by the Japanese government. It was not allowed to haveindependent authority over the formulation of tariffs until 1899. Until thatyear, tariff rates, which had been bound by an international treaty, were 5% orless. Export was also taxed to a similar extent. Quantitative restrictionsplayed no role until 1931.The growth ofocean fleets played an important role in the expansion of trade.
The totaltonnage of Japanese ocean fleets was 23,000 in 1872. It jumped to 3.05 millionin 1920 and increased to 6.4 million in 1941, which was the third largest inthe world only after the UK and US. 1.6 ForeignDirect InvestmentBefore theRestoration, a few foreign trading companies had some stakes in mining sectors2. These foreignstakes were purchased back by the new government.
Foreign firms resumed directinvestment in Japan only after 1899. Most foreign investments were jointventures, and mostly in technology-intensive sectors such as electricalmachinery and automobiles, established through the initiatives of Japaneseenterprises that encountered demand from foreign enterprises for equityparticipation in exchanges of technology and equipment3. The Series of Warsand their Impact on Industries1 Milton Freedman regards thefree trade regime of Japan in the initial three decades of independence as oneof the major success factors for industrialization, compared with thestagnation of industrial development in India after independence (Free toChoose, 1979, Harcourt Brace Jovanovich, Chapter 2).2 Takashima, one of the largestcoal mines then in Japan, was owned by British merchant Thomas Blake Glover,and the first steam railways extended from Tokyo to Yokohama was an investmentby Americans.3 Toshiba-General Electric forelectric valves, Furukawa-Siemens for copper cables, were two examples of thesejoint ventures.
These international ties were maintained until recent times.