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Sumitomo in History  

A Time of Adversity
The End of Rule by the Samurai
A Man for the Times

The End of Rule by the Samurai

The samurai-controlled Tokugawa Shogunate (1603–1867) presided over a 250-year period of peace unparalleled in world history, but the stagnation and contradictions that grew out of the long-term stability also gradually undermined the foundations of the government. In particular, the extravagance of the 11th Shogun, who ruled from 1787 to 1837, led to rising prices and decadence. Then, following the 11th Shogun’s death, the government did an about-face, banning luxuries and tightening control. But this sudden shift also put a damper on the economy. To make matters worse, this was immediately followed by six straight years of bad harvests. Famine struck increasing numbers of people, and there were even reports of starvation in Osaka, Sumitomo’s operations base. The nation was on the brink of crisis, but the Shogunate vacillated and was unable to come up with an effective remedy.
The first half of the 19th century was a difficult period for Sumitomo as well. The Besshi copper mine, which had been the cornerstone of Sumitomo’s operations since mining began there in 1691, was reaching an advanced stage of exploitation. Fuel and other mining resources had to be brought from greater and greater distances, and copper had to be extracted from deeper and deeper layers of the earth. These factors, as well as trouble with seepage, lead to rising costs.
But since copper was one of the few Japanese exports at that time that was competitive in international markets, it was heavily controlled by the shogunate, which did not allow Sumitomo to pass on its rising costs by raising prices. Moreover, the advantages offered by the kaiukemai system, under which the shogunate provided incentives for copper mining by providing rice advances as food for mine workers (for details see Part V, last issue’s installment), failed to keep pace with skyrocketing rice prices, and the program actually became a hindrance.
Despite Sumitomo’s own efforts, which included cutting the pay of the mine’s 3,000 workers, the situation became serious enough that Sumitomo asked the shogunate for permission to shut down the mine. To make matters worse, such dire circumstances were not limited to the Besshi mine. The mine’s cumulative losses also undermined the financial position of the home operations in Osaka, and the shogunate’s policy shift dealt its financial services segment such a severe blow that Sumitomo was forced to pull out of that sector.
Amid such miserable conditions, the shock of the June 1853 arrival of the U.S. Navy brought down the final curtain on the samurai era.

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