Japanese history is replete with heroes admired for successfully challenging the status quo. Nostalgia for such figures increases during tough times, as seen in the “Ryoma boom” borne from the TV series on Sakamoto Ryoma, the Meiji Restoration hero. However, the nation might benefit more from studying a different rebel, one who as an economic reformer enjoyed his own victory over the prevailing orthodoxy.
Such a man was Korekiyo Takahashi (1854-1936), who thanks to Richard J. Smethurst’s impressive new biography can now be given the international stature befitting the title of “Japan’s Keynes.” Much has been written in Japanese about the man described by the author as “one of the two most important financial statesmen in Japan between the Meiji Restoration and World War II.”
While not comparable with Keynes — the Takahashi name does not adorn any major economic theory, for example — the story of the man who rose from humble origins to become a financial and political leader is one deserving of a wider audience. Smethurst, a history professor at the University of Pittsburgh, has found in Takahashi an intriguing, inspiring subject.
The author draws upon extensive Japanese- and English-language materials to provide an engaging study of an unusual life that, if not for the evidence, might seem highly improbable.
Born in Tokyo a year after the U.S. “Black Ships” forced Japan open, Takahashi’s rich life parallels Japan’s rapid period of industrialization as it strove to equal the Western powers. An illegitimate child, Takahashi was adopted by a lowly ranked ashigaru (light infantry) samurai family and had the good fortune to be sent to Yokohama, and then America, to learn English while serving as a “houseboy” to wealthy Westerners. Such an experience might have caused resentment, but Takahashi gained an affinity with foreigners and practical ability in English that proved extremely valuable.
Smethurst paints the picture of a convivial rogue who in his early years had a reputation for carousing and a lack of respect for authority. Despite these traits, the Meiji government entrusted him to undertake such vital tasks as establishing Japan’s first trademark and patent laws, and later, selling war bonds to Westerners to fund the war against Russia (1904-05). The author stumbles at times on the financial detail, but succeeds in conveying some of the main lessons learned.
Smethurst argues that historians’ focus on the military leadership has ignored the importance of Western capital and equipment to the war effort — a point not lost on the victorious Adm. Heihachiro Togo, who told Glasgow shipbuilders in 1911: “You won the battle of Tsushima for me.”
Unlike many among Japan’s current generation of political leaders, Takahashi was not “born to rule” and undertook a variety of entrepreneurial ventures ranging from stockbroking, ranching and even leading a silver mining venture to Peru before entering politics. His business failures did not discourage Takahashi nor prevent him from joining the Bank of Japan, where he rose to hold the post of governor until his appointment as finance minister in 1913. He also had appointments as prime minister and minister of agriculture and commerce, but it was as finance minister that Takahashi made his most important contribution.
According to Smethurst, Takahashi’s deep-rooted belief in the importance of economic growth to create a “rich country, prosperous people” — a revision of the famous Meiji era slogan — led him to adopt Keynesian policies while others were fixated on balanced budgets. Through abandoning the gold standard, cutting interest rates and deficit financing — at the time considered heresy — Takahashi succeeded in bringing Japan out of the global depression by 1935, five years before the U.S. recovery. He also favored policies of decentralization, progressive taxation and democratization that would not look out of place in a modern, liberal party platform. Smethurst also praises Takahashi for seeking the peaceful economic integration of Japan and China at a time when the Japanese military was playing the imperialist game.
Takahashi was assassinated during the Feb. 26, 1936, coup attempt by rightwing Japanese soldiers for his opposition to increased military spending, a death that some argue paved the way to war. At a time when many view the nation’s past as being brighter than its future, Japan might consider how to create more reformers of Takahashi’s ilk. Reading Smethurst’s biography would be a good start.