Establishment of the Empire

Establishment of Shogun

As the European powers began to seek trade and colonies in Asia, the Tokugawa shoguns (1603-1867) tried to preserve Japan’s culture by banning Christianity, expelling foreigners, ending almost all trade and even forbidding Japanese to leave the islands.

End of Seclusion

Under the Meiji emperor, who ruled until 1912, Japan’s leaders sought to modernize Japan by abolishing feudalism and overseeing the creation of a modern military and a directly elected house of representatives.

With the reforms, Japan gathered strength both at home and abroad, surprising the world by defeating China (1894-95) and Russia (1904-05) in wars and gaining new colonies in Taiwan and Korea. Japan began to see itself as the natural master of Asia, guided by a divine emperor.

Brought about an awareness and a rise of Asian races. Students and independence activists came to Japan from Vietnam, China, India and elsewhere.

Defeat of a Western power lent Japan its military and diplomatic clout

Worldwide depression in the 1930s a rise of a right-wing, ultra-nationalist militarist faction, culminating in the election of General Hideki Tojo as prime minister in 1941. Under this group, which had the backing of Emperor Hirohito, Japan invaded Manchuria in 1931, waged a brutal war against China from 1937 to 1945, occupied most of South-East Asia, and in 1941 drew America into the second world war by attacking Pearl Harbour.

Furthermore, the establishment of the League of Nations triggered changes in the international structure and efforts to outlaw war. Japan could not cope with this, and a sense of crisis against a possible all-out war promoted the rise of the military instead. Culture and ideology saw an inclination toward modernism as well as skepticism of Western culture and values.

Defeat changed Japan radically. Hirohito renounced his claim to divinity and Japan lost its colonies. The country was occupied from 1945 to 1952 by a largely American force led by Douglas MacArthur.

It established popular sovereignty, made the emperor a figurehead, established extensive guarantees of civil rights and renounced the state’s right to use military force.

The Korean War reproduced the Cold War structure between the United States and the Soviet Union in East Asia, prompting Japan's rearmament. The two Koreas are still technically at war today.

Factories were quickly built and peasants became factory workers. Middle and upper class men became white collar workers, called salarymen. Salarymen and factory workers were offered lifetime employment. This caused salarymen to have fierce loyalty towards their employers. Most Japanese workers at the time were highly frugal, saving much of what they earned. Many companies merged together to become large industrial and banking conglomerates, called zaibatsu.

The collapse of the Tokyo stock market collapsed the banks tier-two capital and put them under pressure to find capital. They no longer could find easy capital to borrow and had to liquidate many of their overseas holdings, often at a loss.

Japanese banks were also adversely affected by the decline of property values in Japan. In 1990 Japanese banks held about 22 percent of the mortgages in Japan. In addition, many of the loans to small businesses are backed by property and 75 percent of the banks lending is to small businesses.

But in the early 1990s, price levels started to fall - causing consumers' nominal debt to rise in real terms and leading them to postpone consumption even more. The result was nearly two decades of stagnation.

Until recently, the economy has enjoyed around 6 years of uninterrupted growth. Now, as global recession tightens spending, the economy is set for more rough times.

Country Briefing: Japan. 1Jan 2009. The Economist. 2 Feb 2009. <http://www.economist.com/countries/Japan/profile.cfm?folder=History%20in%20brief>

History of Japan.1 Jan 2009. Nation Master. 2 Feb 2009. <http://www.nationmaster.com/encyclopedia/History-of-Japan>

History of Japan. 1 Jan 2009. Japan Guide. 2 Feb 2009. <http://www.japan-guide.com/e/e641.html>