And here we have to point out the striking paradox in Japan’s new
economic society. It was still largely agricultural. In 1925 more than
half the people were dependent on agriculture for their livelihood.
But the peasants were too poor to buy the typical consumption goods
(automobiles, for example) that were staples in the home markets
of Western countries. Thus it was impossible for Japan to develop
modern factory industries turning out _all_ lines of consumption
goods. Only in cotton textiles, with their special export market,
and in shipbuilding and metallurgy, serving the army and navy, were
large-scale factories practical. In 1928 the greater part of Japan’s
manufactured goods was produced in industrial units employing ten,
five or even fewer workers. Firms like Mitsui and Mitsubishi, however,
contracted for the output of these small-scale industrial units and
then sold it, often in foreign markets.
Thus Japan, although she had made great strides in some lines of
industry, had become dangerously dependent on international trade.
After 1929, with the onset of the world depression, the difficulties
of this situation were plain to see. Quotas and tariffs barred even
Japan’s low-priced goods. Old sores rankled, particularly those
affecting immigration. The Exclusion Act, passed by the American
Congress over the President’s disapproval in 1924, cut the deepest.
In fact, it undid most of the good effects of the generous aid America
gave Japan after the earthquake in 1923.