The Economic History of Korea


– The Period of Japanese Colonialism –


Nikolina Kirilova
Sofia University


Japanese Occupation and Independence Movement
In the 19th century, Korea remained a “Hermit Kingdom,” adamantly opposed to Western demands for diplomatic and trade relations. Over time, a few Asian and European countries with imperialistic ambitions competed with each other for influence over the Korean Peninsula. Japan, after winning wars against China and Russia, forcibly annexed Korea and instituted colonial rule in 1910.
Colonial rule stimulated the patriotism of Koreans. Korean intellectuals were infuriated by Japan’s official assimilation policy, which even banned Korean-language education in Korean schools. On March 1, 1919, a peaceful demonstration calling for independence spread nationwide. The Japanese authorities ruthlessly repressed the demonstrators and their supporters, slaughtering thousands.
Although it failed, the March 1 Independence Movement created strong bonds of national identity and patriotism among Koreans. The movement led to the establishment of a Provisional Government in Shanghai, China, as well as an organized armed struggle against the Japanese colonists in Manchuria. The Independence Movement is still commemorated among Koreans every March 1, which is designated a national holiday.
During the colonial period, Japan’s economic exploitation of Korea continued. The lives of Koreans deteriorated under colonial rule until the end of World War II in 1945.
1. The Preparation for the Economic Domination by the Japanese (1906 – 1918)
1. 1. The Land Survey
The acreage of land in the possession of Japanese companies or landowners was drastically increased as a result of the land survey. The Japanese nationalized most of the public land and the real estate in the possession of the former royal household of the Chosŏn Dynasty and transferred it to the hands of Japanese bidders in public auction. For example, “The Oriental Development Company” possessed only 11,035 Chŏngbo  in 1910 but enlarged its possessions to 77,297 Chŏngbo by 1920. The table 1 shows how the company increased its acreage in this country.

Table 1 Increase in the Acreage of “The Oriental Development Company” (In Chŏngbo)
During    Dry Land    Rice Paddies    Others    Total
1910    2,300.6    8,643.8    91.1    11,035.5
1911    6,502.3    18,763.4    1,554.1    26,819.8
1915    18,753.7    46,642.1    4,748.2    70,144.0
1920    19,405.1    51,149.7    6,743.0    77,297.8
1925    19,078.6    50,992.7    15,718.8    85,790.1
1929    17,459.1    48,226.0    30,594.6    96,279.7
1930    16,944.4    46,682.5    41,709.1    105,336.0
1931    16,887.8    46,584.8    60,062.8    123,535.4
Source: Chosen Sotokufu Tokei Nempo.

1. 2. The Distorted Modernization of the Money, Financing and Taxation Systems
The Agricultural and Industrial Banks were established in 1906 and the Local Credit Associations in 1907, while “The Bank of Chosen” was created as a central bank in 1910. “The Bank of Chosen” later extended its influence to Manchuria and North China in preparation for economic invasion by the Japanese.
The Agricultural and Industrial Banks were integrated into a single Industrial Bank of Korea in 1918. This bank and “The Oriental Development Company,” created in 1908, in fact made it their prime objectives to help Japanese landowners and companies increase their Korean acreage. Meanwhile, the Local Credit Associations served only the rich farmers and landowners and made great profits by lending money at high interest rates and acting as salesman of farm products and fertilizer.
The following table indicates the stocks of “The Oriental Development Company” held by region when this company was establishment.

Table 2 Stocks of “The Oriental Development Company” Held by Region
Region    Number of Stocks    Ratio Against 1,000 Stocks
Tokyo    390,861    83.77
Kyoto    517,296    110.87
Osaka    2,220,425    475.92
Nagoya    285,573    61.21
Korea    88,545    18.98
Others    1,162,921    249.25
Total    4,665,621    1,000.00
Source: Toyo Takushoku Kabuski Kaisha 20 Nenshi.

The rate for land tax was increased by 40% in 1914. In the same year the Chosŏn Government-General ruled that all land taxes be collected from landowners only. But in fact, the landowners collected the additional taxes from their tenants. The move was taken to avoid direct conflict with Korean tenant farmers and separate groundrent and land taxes.
1. 3. The Distorted Modernization of the Transportation and Communications
Following the attainment of political, economic and military supremacy over Korea, Japan began to build railways in this country. Korea’s first railway between Noryangjin, on the outskirts of Seoul, and Inch’ŏn was completed in 1899. Other major lines included: Seoul-Pusan line in 1905, Seoul-Sinŭiju line in 1906, Taejŏn-Mokpo line in 1914, Seoul-Wŏnsan in 1914.
Meanwhile, more than 2,600 kilometers of first and second grade roads were built or repaired during the period 1911 to 1918, and a new project to build or repair total of 2,300 kilometers of road was launched in 1917, and completed in 1939.
The undersea cable between Pusan and Nagasaki was laid in 1883 and a telegraph was constructed between Seoul and Inch’ŏn in 1885. Other cables connecting Seoul and such cities as Pusan, Sinŭiju and Wŏnsan also were constructed in the early 1900’s.
2. The Development of Economic Domination by Japanese Colonialism (1919 – 1913)
2. 1. The Agricultural Policies under the Colonial Government
Following the completion of the land survey, the Japanese colonialists began to implement the so-called “Rice Production Increase Plan.” The plan had two obvious objectives: to cover the rice shortage and overcome the economic depression in Japan.
The Japanese planners intended to enlarge the acreage by 800,000 chŏngbo within 30 years so as to raise the total yield by 9.2 million sŏk, But the plan did not work well. They first attempted to mobilize private capital with promises of 20 to 30 percent subsidies for the initiators. However, only a few responded favorably to their encouragement programs because the capitalists saw more profit in cultivated land offering 50 to 70 percent tenant rate than in the wild land on which it would take many years to see any fruitful results.
The following table shows how ineffective show how ineffective the plan was during the period 1912 though 1926.

Table 3 Production, Exportation and Consumption of Korean Rice
During    Production (thousand sŏk)    Index    Exports (thousand sŏk)    Index    Consumption (thousand sŏk)
1912-16    12,302    100    1,056    100    0.7188
1917-21    14,101    110    2,196    208    0.6860
1922-26    14,501    118    4,342    411    0.5871
Source: Chosen no Nogyo.

“The Second Rice Production Increase Plan” was started in 1926. The plan was to enlarge the acreage by 350,000 chŏngbo within 12 years so as to increase production by 4.27 million sŏk. However, the plan was called off in 1934 by the Japanese government.
During the period 1926 to 1934, only 142,095 chŏngbo were reclaimed to increase the yield by 1,173,000 sŏk. One hundred twenty-three new irrigation associations were created to supply water for 15,346 chŏngbo.
2. 2. Agricultural Management under the Colonial Government
Three methods were adopted to determine the rent rate. The first method called Chipcho based the rate on an estimation of the crop which was conducted in the field in the presence of the tenant farmers by representatives of landowners prior to each harvest. In this case land taxes were split between the two, but the price of seeds and fertilizer was charged to the farmer. The rate varied from 50 to 80 percent of the actual crop.
The second one, called T’ajo, divided the crop according to a predetermined rate upon completion of thrashing in the presence of the tenants and the landowners or their representatives. In most cases a fifty-fifty principle was applied. However, the rate varied from 30 to 79 percent of the crop because land taxes, fertilizer and transportation charges fell on the shoulders of the tenant. The third case, called Chŏngjo, was based on a contract in which the tenants were supposed to pay the rent at a predetermined rate regardless of the crops. In this case, too, seeds and fertilizer were charged to the tenants, and the rate varied from 20 to 90 per cent.

Table 4 Comparison of Tenant Rates
(unit: %)
    Chŏngjo system    T’ajo system    Chipcho system
    High    Ave.    Low    High    Ave.    Low    High    Ave.    Low
Rice paddies    74    46    30    65    53    37    65    52    50
Dry land    67    43    32    57    52    32    61    47    30
Source: Chosen ni okeru Kosaku ni kansuru Sanko Jiko Tekiyo.

2. 3. The Mining and Manufacturing Industry before the 1930’s
Large-scale private factories other than government enterprises (Table 5) numbered only a dozen, namely, 8 spinning mills, one textile factory, one fertilizer factory, one cement factory and one iron refinery. And all these were constructed for the benefit of, not Koreans, but the Japanese capitalists. Korea still remained a colonial market for Japanese goods and a supplier of raw materials.

Table 5 Number  of Factories and Workers by Industry (As of the end of June, 1931)
Industry    No. of factories    Percentage    No. of workers    Percentage
Textile    140    11.7%    17,196    26.3%
Metals    61    5.1    2,786    4.3
Machine & tools    63    5.3    3,893    6.0
Earthenware    94    7.8    4,317    6.6
Chemicals    88    7.3    10,033    15.3
Wood & cork    73    6.1    3,547    5.4
Printing & bindery    111    9.3    3,480    5.3
Food & manufacture    479    39.9    16,912    25.9
Gas & electricity    14    1.2    421    0.6
Others    76    6.3    2,789    4.3
Total    1,199    100%    65,374    100%
Source: Kojyo oyobi Kosan ni okeru Rodosha Jyokyo Chosa.

Not only the military and government agencies, but also the big capitalists of Japan participated in the exploration of mineral resources in Korea. By 1925 a total of 29 mines with capital of more than 100,000 yen existed in this country. There were 9 for gold and silver, 7 for iron, 12 for coal, and 1 for copper. Except one gold mine, which was operated by a Korean national, the rest were run by either the military, a government agency, or a big businessman affiliated with the Japanese government.
3. The Strengthening of the Economic Domination by Japanese Colonialism (1932 – 1945)
During the worldwide depression of the 1930’s the crises in the industrial, agricultural and financial fields further aggravated the economic hardships of the peoples of colonies or semi-colonies under the domination of the advanced imperialistic nations.
In prosperity Japan had relied heavily on her trade with underdeveloped countries in the Far East and Southeast Asia. But the worldwide economic depression put an end to the easy profits of Japanese imperialism. The prices of Japan’s major exports, including raw silk and cotton yarn as well as her industrial output, fell drastically and forced the Japanese government to go off the gold standard in 1931. Moreover, delayed payment of salaries and dismissal of laborers en masse caused heated disputes between the working class and the capitalists. The drastic fall in the prices of farm products meant an increase in the number of peasants leaving their farms. In short, Japan was on the brink of internal collapse and national bankruptcy.
As the only way out, the Japanese militarists invaded Manchuria in 1931, the Chinese mainland in 1937, and finally entered the war against the United States and Great Britain in 1941. Japan’s colonial policies had to undergo a complete change. The expansion of munition industries was encouraged in order to provide war materials, and the burdens of the economic depression as well as aggressive wars further aggravated the living conditions of the Korean workers and peasants. As a whole the workers and peasants of Korea were reduced from por to complete bankruptcy and from underprivileged to unprivileged.
3. 1. The Increased Exploitation and Misery of the Peasantry

Table 6 Average per Person Consumption of Principal Grains (In sŏk )
Average in 5 Years    Rice    Millet    Soybeans    Barley    Wheat
1912-1916    0.7188    0.2711    0.1825    0.4233    0.1119
1917-1921    0.6860    0.3231    0.1831    0.4394    0.1098
1922-1926    0.5871    0.3642    0.1772    0.4088    0.1280
1927-1931    0.4964    0.3564    0.1563    0.3876    0.1145
1931-1936    0.4010    0.2885    0.1486    0.4434    0.1063
1937    0.5679    0.2671    0.1525    0.4036    0.0840
Source: Chosen Keizai Zuhyo.

Table 7 Imports and Consumption of Chinese Millet (In sŏk)
Consumption per Person
During    Imported Millet    Millet    Rice    Combined
1912    15,000    0.245    0.774    1.957
1917    205,000    0.317    0.680    2.021
1923    1,270,000    0.366    0.603    1.916
1930    1,717,000    0.354    0.450    1.694
1932    1,584,000    0.303    0.411    1.607
1933    1,046,000    0.318    0.411    1.627
Source: Shyokuminshi.

The above table shows that the per capita consumption of rice decreased year by year while that of other grains increased. This means that Korean farmers had to depend on imported cereals in order to survive despite the fact that they produced a sufficient amount of rice for themselves. Moreover, they had not benefited by the introduction of modern capitalism because semi-feudal lords, landowners and usurious money lenders took advantage of them. For example, the latter would collect farm products to sell to Japanese capitalists at a profit and would also profit from the sale of farming tools and daily necessities.
3. 2. The Distorted Development of the Mining and Manufacturing Industries and the Living Standards of the Working Class
Table 8 indicates that during the period from 1936 to 1943 the number of manufacturing factories increased from 5,927 to 14,856, the number of employees from 188,250 to 549,751 and the output from 730,806 yen to 2,050,000 yen. A comparison of production as a percent of total output shows that the textile industry accounted for 13%; metallic, 9%; machinery and tools, 4%; pottery, 3%; chemicals, 34%; sawing, wood and cork, 1%; printing and bindery, 1%; foodstuff, 22.9%; gas and electricity, 2%; and others, 11%.
A comparison of output by scale of various industries tells us that the large industries hiring more than 200 persons shared 61.8% of the total production against 38.2% for the small and medium industries hiring less than 200 employees.

Table 8 Industrial Development after the 1930’s
During    No. of Factories    No. of Employees    Output (in 1000 yen)
1936    5,927    188,250    730,806
1939    6,952    270,439    1,498,277
1943    14,856    549,751    2,050,000
Source: Chosen no Keizai.

The number of Korean laborers drastically increased as the war industries were rapidly expanded. In 1931 there was a total of 35,895 Koreans working for various mines. But this number increased to 183,000 by 1943. A considerably large number of juvenile workers and women were mobilized for work in mines and factories in order to economize wages. For example, 8% of all mine workers in 1943 were women and 30% of the laborers working at factories hiring more than 30 employees were also women. Forty-eight percent of all employees were juvenile workers under 19, and they numbered 109,000.
Despite the sharp increase in the number of Korean workers, their wages were not improved. According to statistics prepared at the end of 1937, the average daily wage for ordinary mine workers was only 0.763 yen and some of the child workers had to be content within 0.15 yen. Nevertheless, they were required to work at least 10 hours per day. A survey conducted at the end of June, 1931, for 213 mines indicates that 34% of the mines worked more than 12 hours per day and 81% worked more than 10 hours per day.
Choi, 1988: Choi, Hochin. The Economic History of Korea. S.: Sekyungsa, 1988. 387p.