In 1850, Japan was an economy intentionally closed off from foreign trade. Even Japanese merchants and bankers were not well regarded in the country, let along foreign ones. By 1900, Japan had come a long way industrially and financially, possessing a developed banking system and large industrial firms. Shibusawa Eiichi was responsible for much of this. He was not just a financier and a sponsor of industry, he also labored to transform the popular perception of businessmen in a country where their role had rarely been respected.

Shibusawa Eiichi

           Shibusawa Eiichi was born in 1840, in an agrarian household not far outside Tokyo. His father also owned a business processing indigo dye for the textile industry. He bought from planters and sold to weavers; Eiichi assisted in negotiating terms with both planters and weavers. While traveling to do this, Shibusawa Eiichi frequently interacted with government officials on the road. He developed disdain for these samurai officials, who ran the state and received great deference from the people, not on the basis of ability but of birthright.

           In the 1850s and 1860s, Japan was on the verge of tremendous change driven by greater exposure to the outside world and political turmoil within. Shibusawa Eiichi left home in 1863 to join a plot to attack foreigners in the wake of foreign efforts to force unwanted commercial treaties on Japan. This forced opening up began after Commodore Matthew Perry arrived to open Japan to foreign trade in 1854. Shibusawa ultimately abandoned this scheme and associated himself with the reforming Hitotsubashi family who elevated him to the rank of samurai and sent him to Europe as part of the country’s delegation to the 1867 Paris International Exposition.

Future 10,000 Yen Banknote featuring Shibusawa Eiichi (Coming 2024)

           Shibusawa travelled through Europe where he spent a year and a half. The experience caused him to abandon his isolationism. In Europe, he observed a technologically advanced continent in which merchants and industrialists were held in high regard, in contrast to Japan. Businessmen in Europe also seemed to work well with government whereas in Japan, government officials seemed far removed from commercial life. Shibusawa’s travels proved to him the value of entrepreneurship to an economy and its importance to bettering Japan’s place in the world.

Meiji Japan

           This revolutionary era in Japan resulted in the Meiji Restoration, a political revolution which took place in 1868. The new government of Emperor Meiji replaced the earlier Tokugawa Era, during which merchants were viewed negatively and samurai were still charged with, among other things, collecting taxes from businessmen whom they also occasionally badgered for loans.

           In the aftermath of the Meiji Restoration, economic growth was prioritized and liberal measures introduced. The period saw the caste system and guilds abolished, reforms of the military, postal, and education systems, and new large industrial firms established with state support. The government’s goal was to allow Japan to compete with Western countries economically and militarily.

           One of Shibusawa’s first projects following the reforms was establishing an association giving loans to those who had lost their former status amidst the political change and who now turned to business for their livelihoods. This work was noticed by the government and Shibusawa was given government work in crafting tax and currency policy for the Ministry of Finance.

           In addition to tax reform, he worked on the standardization of weights and measures, abolition of the feudal system, and a survey of the country’s natural resources. At the Ministry of Finance, he also contributed to developing a new legal framework for Japan’s banking system, which was then largely based on wealthy individual lenders. Shibusawa resigned in 1873 though after he found his influence on policy was too limited by the politics of the day.

Dai-ichi Bank

           Shibusawa’s attention was caught by banking which he believed could be the foundation for Japan’s economic progress and competition with wealthy Western countries. Banking could drive capital formation by consolidating the savings of the population and deploying it into infrastructure and productive enterprises. The existing system of ‘exchange companies’ handling commercial transactions in port cities was judged inadequate so Japan’s Vice-Minister of Finance, Ito Hirobumi, travelled to the United States to study its banking system and returned with a copy of America’s National Bank Act.

           With the support of prominent merchant groups, Shibusawa helped found Dai Ichi Kokuritsu, or ‘First National Bank’, while still in the government in November 1872. Dai-Ichi was modelled after American national banks which, like Dai-Ichi, were banks of issue allowed to print their own banknotes. Shibusawa would lead Dai-Ichi after leaving the Ministry of Finance in 1873.

           Shibusawa convinced the wealthy to deposit their money with the bank. However, the failure of one of Dai-Ichi’s prominent shareholders and a government decision to grant the Bank of Japan a monopoly on banknote issuance endangered the bank. Still, Dai-Ichi developed a strong business in Korea, where it opened a branch in 1878, the first by a Japanese banking firm in another country. Dai-Ichi served as a sort of central bank for Korea and issued Korean banknotes. While at Dai-Ichi, Shibusawa helped raise capital for firms across an array of industries, from paper and textiles to electric utilities, hotels, and railways and the bank’s activities were reported publicly.

Finance and Industry

           Shibusawa’s contributions to Japanese capitalism extended far beyond the Dai Ichi Kokuritsu. In 1878, he also founded the Tokyo Chamber of Commerce, used by Shibusawa to promote business activity and trust among businessmen and investors, at home and abroad. Shibusawa was also a founder of the Tokyo Stock Exchange, appropriate considering he was a strong advocate for the formation of joint-stock companies in Japan. In 1898, Shibusawa served on the board of thirty-one companies and counting firms in which he was merely a promoter, Shibusawa was involved in the histories of some five hundred companies.

           As mentioned, Shibusawa Eiichi advocated for joint-stock companies but his preference for this corporate form was not just a matter of legal convenience. Whether in the form of a corporation or partnership, Shibusawa believed broad ownership and elected boards, what he called the gappon method, could produce a more moral form of capitalistic enterprise.

           The gappon method stood in contrast to the zaibatsu, the large family-held businesses that dominated Japanese industry at the time. Joint-stock companies and other ‘broad’ forms of corporate organization could draw on a greater number of peoples’ skills and knowledge. Shibusawa thus believed that this corporate form, along with the right kind of management philosophy, could benefit a larger segment of society, even the public at large.

           Further, a joint-stock company could allow more capital to be raised. One such firm Shibusawa was involved in was Osaka Spinning Mill. Founded in 1883, Osaka Spinning Mill acquired British-made spinning equipment and hired a foreign-trained engineer to lead it. The company reversed the decline of Japan’s textile industry.

Japanese Capitalism

           Shibusawa began to step down from his various business positions in 1904, He was effectively retired from most of his roles except that of president of Dai-Ichi by 1909. That year, he led Japanese businessmen on a three-month tour of the United States; compared to the time of his earlier foreign tour, Japan’s role in the world had dramatically changed and this was noticed by all in the aftermath of the Russo-Japanese War earlier that decade. Shibusawa himself was an advocate of Japanese expansionism in Asia but regularly argued that the government was prioritizing military expansion over the domestic economy, something he thought was a bad idea.

           Hoping to draw more people into business, Shibusawa struggled against the reality that many Japanese treated businessmen with suspicion. Still, he was an advocate for more business education, working with Mori Arinori to found the first business school in Japan, the Tokyo Higher School of Commerce, now Hitotsubashi University.

           However, Shibusawa Eiichi is perhaps best known for his focus on moral business practices; he spoke often about the importance of business ethics, the ‘unity of morality and economy’. Shibusawa believed Confucian teachings could point to a means of ‘harmonizing morality and economy’, to put it in his words, and to this end he formed the Ryumonsha, an institute on business practices and ethics, in which he remained involved in retirement. Shibusawa prioritized the public good; earning a profit seemed a rather secondary objective.

           Shibusawa gave a series of lectures in the mid-1920s where, going through the Analects of Confucius line by line, he related the thoughts to his own life and Japanese history. By now, Japan’s economy had changed again as the country was stuck in the same post-First World War downturn that afflicted many nations. In the end, Japanese democracy succumbed to even stronger militarism around the time of Shibusawa’s death in 1931.


            Prior to the 1860s, Japan did not seem a promising place for finance, industry, or commerce. Things changed quickly and while Shibusawa Eiichi might not have set off this change, he did accelerate the country’s economic development. It is hard to think of an American or European equivalent.

            Often, transformative financiers are said to have merely been in the right place at the right time. However, Shibusawa’s work, often proceeding against the grain of his society, clearly had at least as much to do with his sentiments and philosophy as the changes that were already underway in Japan in his day. No doubt this makes Shibusawa Eiichi a significant figure in the history of finance.

More from the Tontine Coffee-House

           Read about the history of Japan’s life insurance industry and the country’s 1980s property boom. Consider subscribing to this blog’s newsletter here.  

Further Reading

1.     “Case Study #11: The Father of Japanese Capitalism: Shibusawa Eiichi’s Vision of the Ethical Corporation.” University of Oxford – Oxford Center for Global History – Global History of Capitalism Project, Apr. 2019.

2.     Masato, Kimura. “Shibusawa Eiichi’s Thoughts on Banking from Public and Private Perspectives.” Journal of Cultural Interaction in East Asia, vol. 6, Mar. 2015, pp. 47–58.

3.     Sagers, John. “Shibusawa Eiichi and the Merger of Confucianism and Capitalism in Modern Japan.” Education About Asia, vol. 19, no. 3, 2014, pp. 30–35.

4.     Sagers, John. “Shibusawa Eiichi, Dai Ichi Bank, and the Spirit of Japanese Capitalism, 1860-1930.” Shashi: the Journal of Japanese Business and Company History, vol. 3, no. 1, 2014. 

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