Comparative study of credit system

1. Commercial Finance in the Expanding Trade: a comparative study of early-19th century Britain and JapanMina Ishizu (m.ishizu@lse.ac.uk) • Workshop ‘British and Japanese Enterprise: Technology, Knowledge, Culture and the Challenges of Globalisation’ • Cardiff Business School 8 August 2011

2. Comparative study of credit system Existing literature on comparison between Britain and Japan The British Financial Revolution in late seventeenth century leading to the Industrial Revolution in late 18th and early 19th centuries Yet, mechanism of capital investment from London credit market to provincial industrialisation remains unexplored. Modernisation of credit system by Chancellor Matsukata in the 1880s preparing the industrialisation in the 1890s However, how proto-industrialisation and Smithian growth in late Tokugawa period (late 18th and 19th centuries) was financed?

3. Research Questions Focus on changes in credit system in early 19th century Mechanism of capital investment through credit flow from commercial capital and regions Provision of commercial credit by financial institutions enables businesses save up capital Relationships between the expansion of trade and the development of credit system

4. Chart 1: Bill discount networks in mid to late 18th century Merchants Merchants Bank of England London Provinces Rediscount Banks Private provincialbanks Rediscount network (Still developing) Discount Discount Bills

5. Atlantic trade and credit system in early 19th century Britain Shift from 18th-century slave trade to more diversified trading patterns Established credit system underperformed to finance new trade organisations Development of bill discounting system between London and the provincial cities Examples - two North West firms ventured into Brazil trade in 1808 and their failure and survival in the 1810 commercial crisis John Leigh & Co of Liverpool Lupton & Luccock of Leeds

6. John Leigh’s Banking Connections 1808-1810 London Liverpool Devayne’s Bank Parr’s Bank Failed 1809 John Leigh Brickwood’s Bank Failed 1809 Failed 1810

7. Chart 2: Bill discount networks in early 19th century Merchants Merchants Bank of England London Provinces Rediscount Banks Private provincial banks Rediscount network Agency system Discount Discount Bills

8. London Leeds Glyn’s Bank Beckett’s Bank Lupton & Luccock Survived 1810

10. Domestic market expansion and credit system in early 19th century Japan Proto-industrialisation and mercantilist domain policies led to the expansion of domestic trade between Osaka (commercial capital), Edo (the government capital: today’s Tokyo) and the countryside Established Osaka-centred credit system financed it enough? Despite the fall in commodities distribution through Osaka, credit system centred on Osaka exchangers continued to function (Ishii 2007)

11. Early 19th century credit system in Tokugawa Japan Province Osaka Senior Exchanger Senior Exchanger Jr exchanger Jr exchanger Merchant Merchant

12. Further research • Changes and continuities in Japanese credit system in the ‘opening of the ports‘ --- How were ‘exporting’ orientated Japanese merchants financed in the provinces? • Changes in British credit system in mid 19th century --- commercial credit in the expanding US cotton trade