Meiji Japan.

In 1867/68, the Tokugawa era found an end in the Meiji Restoration. The emperor Meiji was moved from Kyototo Tokyo which became the new capital; his imperial power was restored. The actual political power was transferred from the Tokugawa Bakufu into the hands of a small group of nobles and former samurai.
Like other subjugated Asian nations, the Japanese were forced to sign unequal treaties with Western powers. These treaties granted the Westerners one-sided economical and legal advantages in Japan. In order to regain independence from the Europeans and Americans and establish herself as a respected nation in the world, Meiji Japan was determined to close the gap to the Western powers economically and militarily. Drastic reforms were carried out in practically all areas.
The new government aimed to make Japan a democratic state with equality among all its people. The boundaries between the social classes of Tokugawa Japan were gradually broken down. Consequently, the samurai were the big losers of those social reforms since they lost all their privileges. The reforms also included the establishment of human rights such as religious freedom in 1873.
In order to stabilize the new government, the former feudal lords (daimyo) had to return all their lands to the emperor. This was achieved already in 1870 and followed by the restructuring of the country in prefectures.
The education system was reformed after the French and later after the German system. Among those reforms was the introduction of compulsory education.
After about one to two decades of intensive westernization, a revival of conservative and nationalistic feelings took place: principles of Confucianism and Shinto including the worship of the emperor were increasingly emphasized and taught at educational institutions.
Catching up on the military sector was, of course, a high priority for Japan in an era of European and American imperialism. Universal conscription was introduced, and a new army modelled after the Prussian force, and a navy after the British one were established.
In order to transform the agrarian economy of Tokugawa Japan into a developed industrial one, many Japanese scholars were sent abroad to study Western science and languages, while foreign experts taught in Japan. The transportation and communication networks were improved by means of large governmental investments. The government also directly supported the prospering of businesses and industries, especially the large and powerful family businesses called zaibatsu.
The large expenditures led to a financial crisis in the middle of the 1880's which was followed by a reform of the currency system and the establishment of the Bank of Japan. The textile industry grew fastest and remained the largest Japanese industry until WW2. Work conditions in the early factories were very bad, but developing socialist and liberal movements were soon suppressed by the ruling clique.
On the political sector, Japan received its first European style constitution in 1889. A parliament, the Diet was established while the emperor kept sovereignty: he stood at the top of the army, navy, executive and legislative power. The ruling clique, however, kept on holding the actual power, and the able and intelligent emperor Meiji agreed with most of their actions. Political parties did not yet gain real power due to the lack of unity among their members.
Conflicts of interests in Korea between China and Japan led to the Sino-Japanese War in 1894-95. Japan defeated China, received Taiwan, but was forced by Russia, France and Germany to return other territories. The so called Triple Intervention caused the Japanese army and navy to intensify their rearmament.
New conflicts of interests in Korea and Manchuria, this time between Russia and Japan, led to the Russo-Japanese War in 1904-05. The Japanese army also won this war gaining territory and finally some international respect. Japan further increased her influence on Korea and annexed her completely in 1910. In Japan, the war successes caused nationalism to increase even more, and other Asian nations also started to develop national self confidence.
In 1912 emperor Meiji died, and the era of the ruling clique of elder statesmen (genro) was about to end.
The Meiji Restoration was a significant turning point in Japanese history because it led to revolutionary changes in Japan’s economic and political structures.
Commodore Matthew Perry’s arrival at Edo Bay (Tokyo was once named Edo) in 1853 demonstrated to Japan the superior military power of the West. Japan’s coast was not protected nor did the nation possess a navy capable of defending their marine food supply which helped feed Edo’s one million people.
The Japanese reacted to their vulnerability by renewing the old spirit of the samurai warrior code, and championing the slogan sonno joi, “revere the emperor, expel the barbarians.” As a result of Perry’s arrival, Japan was headed in a new direction despite political turmoil and national disorganization. The Choshu and Satsuma daimyo (a feudal lord)allied together to remove the Tokugawa shogunate (the government of a shogun, who is a dictator ruler over daimyo) and instead restored power to the imperial emperor Meiji, thus this time period in Japan is known as the Meiji Restoration.
The Meiji government discovered that if Japan were to protect its national sovereignty, it needed to change its direction by abandoning feudalism and uniting the daimyo under a central government. In addition, Japan decided to adopt the political and economic structures, social customs, and technology of the Western powers.
The Meiji government believed that through Westernization they could modernize their economy, build their military, and be equal counterparts to the U.S., Great Britain, Russia, among others. Thus Perry and the showing of American military might was the spark that pivoted Japanese history in the new direction of modernization through Westernization.
With a new direction chartered towards to modernization the Japanese began a series of transformations in the areas of economics and politics. The economic transformations were born from the Japanese slogan, fukoku kyohei, meaning “Enrich the country, strengthen the military.”
If the Japanese were to modernize their military it needed to start with the industrialization of their economy. The Japanese government improved the infrastructure by building railways, telegraph lines, and shipping routes between domestic port cities.
Furthermore, the government played a strong role in establishing and propping up heavy industries such as textiles, coal mining, iron and steel works, and cement and brick plants. Canons and other armaments were produced from the forged iron which contributed to modernizing the military.
All these economic improvements demonstrate the dynamic change under the Meiji reign. However, change was not limited to the Japanese economy, for the political sphere was undergoing renovation too.
Students who had gone abroad on the Iwakura Mission returned in 1871 and brought with them new ideas on economics and politics. New Japanese political structures were derived from the Iwakura mission and later helped shape the government during the Meiji era.
The new ideas on government led to the Osaka agreement which outlined the establishment of a Supreme Court and Senate, although this provision was unsuccessful. However, the Osaka agreement was successful in establishing elected assemblies of tax-paying men who gathered to discuss financial issues. This is an important change because it was the first example of a popularly elected assembly in the East.
Another political transformation in Japan was the authorization of the Meiji Constitution. The constitution made provisions for a bicameral parliament (having two legislative houses) —the Diet (upper chamber) and the House of Peers (lower chamber). Also, the constitution included the right to speech, religion, and publication, an offspring of the First Amendment in the U.S. Constitution.
The political transformations in Japan are clear borrowings from the Western world. While the Japanese mixed Western institutions and philosophy with Eastern thinking, they laid the groundwork for the political institutions of the Meiji emperor and parliamentary bodies. The new emphasis on the Meiji emperor and introduction of Western government is a complete divergence from the uji, bakufu, and daimyo governing systems.
The next aspect in determining a turning point is the significance of the change. It is clear that Japan’s new direction towards Westernization brought about lasting changes. For example, the economic and military development in Japan allowed the island nation to emerge victorious in the Sino-Japanese and Russo-Japanese Wars. This is important to note because it established in the early 20th century Japan’s military power and imperialistic capabilities.
With a modernized military, increasing political unity, and national pride, the Japanese emerged as the new non-Western imperialist power with territorial claims in China and Korea. History would later see the Japanese invasion of Manchuria and during World War II the invasion of the Philippines, Indochina, and various Pacific Islands.
Therefore, Japan’s dominance during the 20th century can be attributed to the turning point of the Meiji Restoration where Japan changed courses towards modernization through Westernization. If Japan had not modernized, its imperialist ambitions would have proved difficult with an agrarian economy, obsolete military technology, and political infighting. Had it not been for Perry’s arrival the Japanese would not have felt as pressured to prevent themselves from succumbing to Western powers like their neighbor China had, although this was a smaller contributing pressure.
The Meiji Restoration ranks as one of the most significant turning points in Japanese history because it elevated Japan to arguably the most powerful Asian power. Without the spark of Perry’s arrival and the push for Westernization there would not have been any pressure to modernize and the Tokugawa shogunate would have continued to reign.
For those who would argue the Meiji Restoration was insignificant in Japanese history will need to realize the far-reaching impacts this period had not only on Japan in the late 19th century, but also the Meiji influence on present-day Japan. As it turns out, the rush to modernize for purposes of self-preservation and sovereignty proved beneficial to the short and long-term future of Japan, for now we see this once backward country leading the forefront of technology, science, and economics. For nearly 250 years, the islands comprising the nation of Japan kept a silent vigil in the far reaches of the Pacific Ocean. By the early 1600s, foreigners had been expelled and Christianity outlawed. Occasional attempts at contact by western nations, who alternated between intrigue and frustration, met with stony faced orders to leave. All this changed in 1853, when the United States sent Commodore Matthew C. Perry to Japan with a letter from President Millard Fillmore to the emperor, and orders (actually written by Perry himself) to obtain a treaty. Two connected factors necessitated these actions. The first involved the lucrative China trade, driven by profit and the alluring scents of tea and peppers, the luxury of exotic silks and the delicacy of fine porcelains. The second was the need for a refueling station for the coal-powered, smoke-billowing steam ships which had so astounded the Japanese upon Perry's arrival. These ironclad monsters needed huge amounts of coal, leaving little room for cargo on the trips to and from China and San Francisco. Japan happened to have plenty of coal deposits and found itself encompassed within the American idea of manifest destiny as the stepping stone to China. Perry completed his mission in 1854 and within the next few years, technologically inferior Japan was intimidated into a number of unequal treaties with America, Britain, France and Russia. The Dutch also pressed their advantage in having been the only outside western contact with Japan during the isolation years through a small, tightly controlled trading post on the island of Deshima outside of Nagasaki. It appeared as if Japan might be headed for the same fate as China, to eventually lose central control to competing spheres of foreign influence.

China and Japan, however, took separate paths in their reaction to the Western powers. Many Japanese were alarmed at these events and anti-foreign sentiment grew among samurai (the warrior class) and the daimyo (feudal lords) who had already resented Tokugawa rule. The Tokugawa clan, headed by the shogun, (the military leader) had ruled Japan since 1603, and was now blamed for the shame which the unequal treaties had inflicted upon Japan. In the end, the Tokugawa shogunate was overthrown and a new group of leaders emerged at the same time a new emperor ascended the throne. Every emperor of Japan is known by a title named "for the era during which he would rule"(1). Thus was born the Meiji Era, which means "enlightened rule." The emperor served mainly as a figurehead and a small group of men, who would become known as the Meiji oligarchs, ruled the country. What followed, from 1867 to 1912, remains unparalleled in history.
As deeply humiliating as the western show of force had been, many realized that until Japan caught up with the west technologically, the unequal treaties and their own perceived inferior status would remain intact. While culture and the arts had flourished during the period of isolation, the scientific and industrial revolutions had raged around the blissfully unaware Japanese. This had to change for Japan to compete in the modern world. Accordingly, the oligarchs set the nation upon a course of modernization which would produce dramatic results. The first step was to foster a sense of nationalism and unity. Until then, most Japanese had identified themselves as loyal to their daimyo first. The emperor was a revered but very distant figure. The oligarchs placed the Meiji emperor upon a high and sacred pedestal and every reform was carried out in his name. Education in this highly literate nation promoted patriotism and the military were taught the virtues of "unquestioning obedience and sacrifice"(2).
With this sense of national pride in place, the oligarchs were ready to administer sweeping reforms, the first of which ended the status of the samurai. By 1876, samurai were forbidden to carry their traditional swords and the warrior class evolved into bureaucrats. Peasants who had previously been forbidden to carry arms were conscripted into a centralized army. The old class system of Japan was abandoned. With astounding speed, universities were founded, telegraph and railroad lines cross-crossed the country and a national postal system was set up. The shipping and textile industries took off, as shown by the facts that "by the end of the Meiji period, more than a third of the world's supply of silk came from Japan" and the percentage of exports carried on Japanese built and owned ships rose from 7% in 1893 to 52% by 1913(3). How was such progress at such a rate possible? The answer lies in the Japanese traits of flexibility and adaptability. Simply put, they borrowed the best of the West and molded it to fit Japan's needs.
A simple story illustrates how enthusiastically and effectively the Japanese borrowed and adapted from other countries during the Meiji Era. It is no secret that baseball (besuboru) is one of Japan's most popular sports. What is less well known is that the first baseball team in Japan formed in 1873. A Christian missionary teacher by the name of Horace Wilson taught students the game at what would later be Tokyo University. Unfortunately for Wilson, baseball became much more popular than did Christianity. In 1891, a Japanese team challenged the Americans in Yokohama to a game. The American Athletic Club initially did not take the challenge seriously. Convinced of their own superiority as the masters of an American game and sure of a win over the smaller Japanese, it took five years before they finally agreed to a game. The game took place at the Club, where Japanese had previously not been allowed to enter, and the Japanese team showed no reaction to the boos and catcalls of the gaijin (foreigner) crowd. What happened next shocked the complacent Americans. The Japanese won 29-4. In a later rematch the Japanese once again won with another large gap in the scores. They had been playing for national honor.

Many characterize what Japan did at this time as "rational shopping." They borrowed technology, social systems, infrastructure, and educational methods from countries around the world and adapted and fitted them to their own needs and culture. They used what worked and abandoned what did not. To do this, the Meiji oligarchs set off on an around the world junket in 1871 known as the Iwakura Mission, named for the head of the delegation, Iwakura Tomomi. They spent several months each in the United States, England and Europe, and studied everything they encountered from banking systems to zoos. They brought home anything which might be useful to Japan, in one form or another, including a police system modeled somewhat on the French system, an educational system influenced by both America and Prussia, and new forms of agriculture.
Exchange of bodies also occurred during and after the mission. Several students, including young children, were a part of the Iwakura Mission. These students stayed behind in different countries with host families for years of foreign education before returning home. Many of them would later play important roles during the Meiji Era. Upon return to Japan, the oligarchs also invited foreigners to serve Japan in an advisory capacity. Well over 2,000 people from 23 countries ended up on the Japanese payroll for a period of time.
Despite the open relations marking this time period, and the growing international popularity of Japanese art, cultural misunderstanding thrived. Some astute analyses were made about Japan in the West, but for the most part, reports in the media and books by uninformed people perpetuated ignorance and prejudice. Practices such as public bathing and tattooing shocked Westerners, and reports circulated that the Japanese had no business sense (an idea rather amusing to modern readers). The role of Japanese women also suffered an image problem of a different kind. Westerners fell in love with the stereotype of a docile, selfless, beautiful, charming and obedient sex, which failed to address the inner lives of Japanese women or their own views on the role they played in society. This kind of willful misunderstanding later followed Japanese immigrants to America and plagued relations between the two countries for a very long period of time.
As far-reaching and wonderful as the new innovations seemed, they also came at a price. Taxes on farmers rose to pay for urban development and, especially in the countryside, people were often confused and apprehensive about new technology. A very literal correlation was made by the peasants between the new "blood tax," which was actually mandatory service in the military, and the new telegraph wires lining the landscape. Many believed that their blood would be used to coat the wires and mysteriously carry messages. Japan's own industrial revolution brought many of the same problems Britain, America and Europe had faced, with harsh working conditions and exploitation of workers. Resentment also existed as Western styles of clothing and customs became popular. Many worried that this threatened traditional culture.
The infatuation with all things Western reached a zenith, however, and then retreated as Japan came to the realization that the national priority lay in a phrase adopted at the beginning of the Meiji Era: fukoku kyohei, meaning prosperous nation and a strong army. That simple phrase provided the foundation for Japan's modernization and would direct the course of the nation for decades to come. Japan had never forgotten the effectiveness of Western military might in opening up their country, and they had earlier watched in alarm as the Chinese suffered through the Opium Wars. Determined not to suffer the same fate, one of the most influential of the Meiji oligarchs, Fukuzawa Yukichi, wrote in 1885, "We cannot wait for our neighbor countries to become so civilized that all may combine together to make Asia progress. We must rather break out of formation and behave in the same way as the civilized countries of the West are doing…We would do better to treat China and Korea in the same way as do the Western nations."(4) In this idea lay the roots of Japanese Imperialism.
The Meiji Era (明治時代 1868-1912) designates the reign of the Meiji Emperor. During this time, Japan started its modernization and rose to world power status.In 1867, 15-year old Mutsuhito succeded his father, the Emperor Komei (孝明天皇, Kōmei-tennō), taking the title Meiji, meaning "enlightened rule". The Meiji Restoration of 1868 ended the 265-year-old feudalistic Tokugawa shogunate.

Considering that the economic structure and production of the country was roughly equivalent to Elizabethan era England, becoming a world power in such a short time was remarkable progress. There were at least two reasons for the speed of Japan's modernization: the employment of over 3,000 foreign experts (oyatoi gaikokujin [kyūjitai 御雇ひ外國人, shinjitai 御雇い外国人, "hired foreigners"]), with thousands more in the private sector, in a variety of specialist fields such as teaching foreign languages, science, engineering, the military, etc; and the dispatch of many Japanese students (such as the Chōshū Five) overseas to Europe and America, based on the fifth and last article of the Charter Oath of 1868: 'Knowledge shall be sought throughout the world so as to strengthen the foundations of Imperial rule.' This process of modernization was closely monitored and heavily subsidized by the Meiji government, enhancing the power of the great zaibatsu firms such as Mitsui, Sumitomo and Mitsubishi.

Hand in hand, the zaibatsu and government guided the nation, adopting and adapting technology from the West. Japan gradually took control of much of Asia's market for manufactures, beginning with textiles. The economic structure became very mercantilistic, importing raw materials and exporting finished products - a reflection of Japan's relative poverty in raw materials.

Following her defeat of China in Korea in the Sino-Japanese War (1894/95), Japan emerged as an international power with its victory against Russia in Manchuria (north-eastern China) in the Russo-Japanese War of 1904/05. Allied with Britain since the Anglo-Japanese Alliance signed in London on January 30, 1902, Japan joined the Allies in World War I, seizing German-held territories in China and the Pacific in the process, but otherwise remained largely out of the conflict.

After the war, a weakened Europe left a greater share in international markets to the U.S. and Japan, which emerged greatly strengthened. Japanese competition made great inroads into hitherto European-dominated markets in Asia, not only in China, but even in European colonies like India and Indonesia, reflecting the development of the Meiji era.

The major institutional accomplishment after the Satsuma Rebellion under Saigo Takamori was the start of the trend toward developing representative and constitutional government. People who had been forced out or left out of the governing apparatus after the Meiji Restoration had witnessed or heard of the success of representative institutions in other countries of the world and applied greater pressure for a voice in government.

A major proponent of representative government was Itagaki Taisuke (1837-1919), a powerful Tosa leader who had resigned from the Council of State over the Korean affair in 1873. Itagaki sought peaceful rather than rebellious means to gain a voice in government. He started a school and a movement aimed at establishing a constitutional monarchy and a legislative assembly. Itagaki and others wrote the Tosa Memorial in 1874 criticizing the unbridled power of the oligarchy and calling for the immediate establishment of representative government.

Dissatisfied with the pace of reform after having rejoined the Council of State in 1875, Itagaki organized his followers and other democratic proponents into the nationwide Aikokusha (愛国社, Society of Patriots) to push for representative government in 1878. In 1881, in a move he is best known for, Itagaki helped found the Jiyūtō (自由党, Liberal Party), which favored French political doctrines.

In 1882 Okuma Shigenobu established the Rikken Kaishintō (立憲改進党, Constitutional Reform Party), wcalling for a British-style constitutional democracy. In response, government bureaucrats, local government officials, and other conservatives established the Rikken Teiseito (立憲帝政党, Constitutional Imperial Rule Party), a pro-government party, in 1882, resulting in political upheaval and further government restrictions. The restrictions hindered the political parties and led to divisions within and among them. The Jiyuto, which had opposed the Kaishinto, was disbanded in 1884, and Okuma resigned as chairman of Kaishinto.

Government leaders, long preoccupied with violent threats to stability and the serious leadership split over the Korean affair, generally agreed that constitutional government should someday be established. The Choshu leader Kido Takayoshi had favored a constitutional form of government since before 1874, and several proposals for constitutional guarantees had been drafted. The oligarchy, however, while acknowledging the realities of political pressure, was determined to keep control. Thus, only modest steps towards constitutionalism were taken.

The Osaka Conference in 1875 resulted in the reorganization of government with an independent judiciary and an appointed Council of Elders (元老院 genronin) tasked with reviewing proposals for a legislature. The emperor declared that "constitutional government shall be established in gradual stages" as he ordered the Council of Elders to draft a constitution.

Three years later, the Conference of Prefectural Governors established elected prefectural assemblies. Although limited in their authority, these assemblies represented a move in the direction of representative government at the national level, and by 1880 assemblies also had been formed in villages and towns. In 1880 delegates from twenty-four prefectures held a national convention to establish the Kokkai Kisei Dōmei (国会期成同盟, League for Establishing a National Assembly).

Although the government was not opposed to parliamentary rule, confronted with the drive for "people's rights", it continued to try to control the political situation. New laws in 1875 prohibited press criticism of the government or discussion of national laws. The Public Assembly Law (1880) severely limited public gatherings by disallowing attendance by civil servants and requiring police permission for all meetings.

Within the ruling circle, however, and despite the conservative approach of the leadership, Okuma continued as a lone advocate of British-style government, a government with political parties and a cabinet organized by the majority party, answerable to the national assembly. He called for elections to be held by 1882 and for a national assembly to be convened by 1883; in doing so, he precipitated a political crisis that ended with an 1881 imperial rescript declaring the establishment of a national assembly in 1890 and dismissing Okuma.

Rejecting the British model, Iwakura and other conservatives borrowed heavily from the Prussian constitutional system. One of the Meiji oligarchy, Ito Hirobumi (1841-1909), a Chōshū native long involved in government affairs, was charged with drafting Japan's constitution. He led a Constitutional Study Mission abroad in 1882, spending most of his time in Germany. He rejected the United States Constitution as "too liberal" and the British system as too unwieldy and having a parliament with too much control over the monarchy; the French and Spanish models were rejected as tending toward despotism.

One of the first acts of the Meiji government was to establish new ranks for the nobility, kazoku (華族, literally "flowery/illustrious lineage"), a system of hereditary peerage that existed between 1869 and 1947. Five hundred persons from the old court nobility, former daimyō, and samurai, who had provided valuable service to the emperor were organized in five ranks: Prince or Duke (公爵 kōshaku), Marquis (侯爵 kōshaku), Earl or Count (伯爵 hakushaku), Viscount (子爵 shishaku) and Baron (男爵 danshaku).

Ito was put in charge of the new Bureau for Investigation of Constitutional Systems in 1884, and the Council of State was replaced in 1885 with a cabinet headed by Ito as prime minister. The positions of chancellor, minister of the left, and minister of the right, which had existed since the 7th century as advisory positions to the emperor, were all abolished. In their place, the Privy Council (枢密院 sūmitsu-in) was established in 1888 to evaluate the forthcoming constitution and to advise the emperor.

To further strengthen the authority of the state, the Supreme War Council (軍事参議官会議 gunji sangikan kaigi) was established under the leadership of Yamagata Aritomo (1838-1922), another Chōshū native who has been credited with the founding of the modern Japanese army and was to become the first constitutional prime minister. The Supreme War Council developed a German-style general staff system with a chief of staff who had direct access to the emperor and who could operate independently of the army minister and civilian officials.

When finally granted by the emperor as a sign of his sharing his authority and giving rights and liberties to his subjects, the 1889 Constitution of the Empire of Japan (the Meiji Constitution) provided for the Imperial Diet (帝國議会 teikoku gikai), composed of a popularly elected House of Representatives with a very limited franchise of male citizens who paid 15 in national taxes, about 1 percent of the population, and the House of Peers, composed of nobility and imperial appointees; and a cabinet responsible to the emperor and independent of the legislature. The Diet could approve government legislation and initiate laws, make representations to the government, and submit petitions to the emperor. Nevertheless, in spite of these institutional changes, sovereignty still resided in the emperor on the basis of his divine ancestry.

The new constitution specified a form of government that was still authoritarian in character, with the emperor holding the ultimate power and only minimal concessions made to popular rights and parliamentary mechanisms. Party participation was recognized as part of the political process. The Meiji Constitution was to last as the fundamental law until 1947.

In the early years of constitutional government, the strengths and weaknesses of the Meiji Constitution were revealed. A small clique of Satsuma and Chōshū elite continued to rule Japan, becoming institutionalized as an extraconstitutional body of genrō (elder statesmen). Collectively, the genro made decisions reserved for the emperor, and the genrō, not the emperor, controlled the government politically.

Throughout the period, however, political problems were usually solved through compromise, and political parties gradually increased their power over the government and held an ever larger role in the political process as a result. Between 1891 and 1895, Ito served as prime minister with a cabinet composed mostly of genrō who wanted to establish a government party to control the House of Representatives. Although not fully realized, the trend toward party politics was well established.

Japan emerged from the Tokugawa-Meiji transition as the first Asian industrialized nation. Domestic commercial activities and limited foreign trade had met the demands for material culture in the Tokugawa period, but the modernized Meiji era had radically different requirements. From the onset, the Meiji rulers embraced the concept of a market economy and adopted British and North American forms of free enterprise capitalism. The private sector - in a nation blessed with an abundance of aggressive entrepreneurs - welcomed such change.

Economic reforms included a unified modern currency based on the yen, banking, commercial and tax laws, stock exchanges, and a communications network. Establishment of a modern institutional framework conducive to an advanced capitalist economy took time but was completed by the 1890s. By this time, the government had largely relinquished direct control of the modernization process, primarily for budgetary reasons.

Many of the former daimyō, whose pensions had been paid in a lump sum, benefited greatly through investments they made in emerging industries. Those who had been informally involved in foreign trade before the Meiji Restoration also flourished. Old bakufu-serving firms that clung to their traditional ways failed in the new, more competitive business environment.

The government was initially involved in economic modernization, providing a number of "model factories" to facilitate the transition to the modern period. After the first twenty years of the Meiji period, the industrial economy expanded rapidly until about 1920 with input of advanced Western technology and large private investments. Stimulated by wars and through cautious economic planning, Japan emerged from World War I as a major industrial nation.

After the death of the Meiji Emperor in 1912, the Taisho Emperor took the throne, thus beginning the Taisho Period