The technological progress and the transformationof labor organization:
Modernization of Japanese coal mining
from the 1900s to the 1930s
ISS Discussion Paper Series
F-149
July 2009
Mayo Morimoto†

Graduate School of Economics
The University of Tokyo

Abstract
This paper focuses on the interaction between the changes in production technology and thetransformation of labor organization in the coal mining. Along with the introduction of modern
technology, the Japanese coal mining experienced drastic changes both in the labor organization andthe labor market. Coal mining firms moved from indirect employment to direct employment andbuilt up the internal labor market in which investment in human capital was conducted by each firm,
as new skills were required for handling machines newly introduced. At the same time, when
traditional skills being less useful, intermediary bodies that had supplied workers with firms
disappeared and firms directly came in the labor market to hire freshmen.

†

Corresponding address: Institute of Social Science, The University of Tokyo, Hongo 7-3-1,
113-0033 TOKYO, Japan.
Email address: mayo.morimoto@gmail.com

Introduction
Transition of labor organization from the one that had kept autonomy within the firm to the one thatwas directly controlled by the firm has attracted attentions of many scholars in history andeconomics.

Many interesting and drastic changes in incentive mechanisms occurred along withtechnological changes. Mining industry, coal mining industry in particular, is a good case toinquire this issue, since it had a long history as a traditional industry and developed rapidly as amodern industry during industrialization.

In the same firm of the same industry, phenomenaltransformation of organization has been observed. This paper studies an organizational changes incoal mining industry in the Chikuho district, Kyusyu, a southern island of Japan from the 1900s to
the 1930s, when rapid modernization progressed there.

Section 1 summarizes a theoretical

viewpoint on which this paper stands on, section 2 focuses on organizational changes within mining
firms and institutional changes in the labor market, and section 3 deals with formation of the internal
labor market in Japanese coal mining industry.

1. The transformation of labor organization in the Japanese coal mining

1.1 Two types of problem from the asymmetric information
Coal mining firm could not observe miners’ skill and behavior, especially when its operation
depended on manual skill (traditional skill). There existed two types of problem from asymmetric
information between the firm and miners.

1.1.1 Moral hazard
The firm could not observe what miners did inside of coal mine. Even if a miner lied about his/her
effort to the firm, it could not judge whether it was true or not. Hence it could not know how toprovide incentives. This, moral hazard was provoked by asymmetric information between the firm
and miners about miners’ action after entering the employment contract.

1.1.2 Adverse selection
Especially when operation of coal mining depended on manual skill, the firm could not evaluate theskill. It could not decide what kind of person suited the job. This, adverse selection was provoked byasymmetric information between the firm and miners about miners’ skill or type before entering theemployment contract.

1.2 Indirect control of labor organization under asymmetric information problems
This section focuses on the level of asymmetric information and its effect on the labor organization.
There were four stages in the transition of labor organization.
11.2.1 Naya system
When both moral hazard and adverse selection was serious, both recruitment and monitoring were
fully delegated to inside contract system (naya system) by the firm. Naya originally meant barns or
small houses for miners and inside contract system in coal mining was called the naya system. A
naya organization consisted of a head and some units of miners. The head of naya was delegated by
the firm to recruit miners, to motivate them to work, and also to care about miners’ daily living
conditions. He received payment by taking responsibility of such things on behalf of the firm. He
received wages of all miners in his naya in a lump. He handed exact amount of wage to each miner
determined by him. There was a difference between the amount he received from the firm and theamount he paid out to miners as wage. This difference belonged to him. That was the primary
portion of his information rent acquired by dealing with asymmetric information and calming
adverse selection and moral hazard problems. This is an economic interpretation of “pocketing”
miners’ wage.

1.2.2 Sewagata system
When only adverse selection existed, the firm took sewagata system. As mining machines wereintroduced by the firm, it could observe how many workers were necessary in order to mine a certain
amount of coal. The introduction of a coal cutter affected miners’ daily operation, and this wasimportant part that determined their wage. The firm now understood how to give incentives tominers through wage setting. That is, moral hazard was eased. The labor organization wastransformed to the next stage, indirect monitoring with direct employment, called sewagata system.
A sewagata conducted the half potion of the head of naya’s work. We could regard this was just achange of the name. However sewagata kept out of handling miners’ wage at all. Other works,
typically recruiting, were still delegated to sewagata by the firm.

1.2.3 Directly managed naya
This case was observed in the early 1900s. We closely look at this in chapter 2. Neither adverse
selection nor moral hazard had really been solved, but the firm tried to work on the adverse selection
problem.
As already mentioned, a naya generally took dual structure: naya as a whole and small units
belonging to the naya, each of which unit was composed of a leader and several miners. The firm
tried to directly control the leaders of small units, not through the head of naya. This simplified theinside contract system with directly controlling small units. Daily operations were carried on byminers belonged to units. The firm had used to pay information rent to the heads of naya. Then hepaid information rent to the leaders of units. Both information rents were incurred by the firm as a2whole. The firm tried to save double information rent by skipping the head of naya and directly
hiring leaders of small units.
This organizational change was not directly related to technological change at mining process,while it seemed that mechanization at bord transportation improved information observed by thefirm. The firm still did not observe inside of its coal mine. After this organizational change, itskipped the head of naya but still delegated the leaders of units to give incentives to miners. This
stage was achieved probably because the firm tried to put the traditional skill under internal control
and it realized naya’s dual structure was not necessary. It began to directly hire the leaders of small
units of a naya.

1.2.4 Direct labor organization
When both problems were considerably eased, the firm chose perfectly direct labor organization.
After introduction of mining machines, the firm could know the needed skill and it could recruit
appropriate workers. Thus it did not need to delegate anything to inside contract system any more. It
only had to train miners to be able to use machines. It did not have to care about workers’ ex-job. It
abolished inside contract system (naya system) and the services that had been carried on by theheads of naya now turned to be handled by members of the firm’s administrative stuff.

2

The beginning of transformation: A case of Aso Coal mining Co. in the 1900s.

Aso Coal Mining Co. was one of the largest local companies in the Chikuho district. Aso Co.
purchased the Second Fujidana Coal Mine from a local merchant in 1902 and it to Mitsui Coal
Mining Co. in 1907.

2.1 Recruitment by the Second Fujidana Coal MineThe Second Fujidana Coal Mine still mainly depended on naya system, but partly adopted kind ofintermediate labor organization in which employment was direct but monitoring was indirect. Aso
Co. seemed to be in transition from inside contract system to fully direct labor organization. In theearly 1900s, it had not introduced longwall mining method and neither mining machines yet. Hencethe role of the heads of naya was still critical in the process of mining. At the same time Aso Co.
introduced a new intermediate organization that was still a part of inside contract system. So aquestion comes into our mind, that is, how Aso Co. tried to ease the asymmetric information
between workers and the firm without introduction of new mining method and mining machines.
There are some historical documents that help us approach the question. The most useful on isapplications of miners for this coal mine. The applications contained applicant’s name, his/her dateof birth, previous job, date of application, and name of his/her guarantor. The guarantor was the head3

of naya, the leader of smaller miners’ group, or a member of administrative staff of human resources.

2.2 Structure of the labor market seen on the applications
Applications of 776 miners have been preserved for the period from 1902 to 1907. Male applicants
were 590 and female applicants were 186. Among male applicants, 193 people applied with theirfamily members; his wife, son, daughter, brother, or mother. The regional distribution of their origins
is seen on the Table 1.
Home adresses of miners

Table 1

KyushuChugoku

Shikoku

Kinki

Fukuoka

272

Saga

37

Oita

83

Kumamoto

57

Nagasaki

16

Miyazaki

7

Kagoshima

6

Hiroshima

90

Shimane32

Yamaguchi

31

Okayama13

Tottori

6

Ehime

72

Kagawa22

Tokushima

8

Kochi

6

Hyogo

7

Osaka

4

Wakayama

3

Nara

2

Total

774
(From 1902 to 1907)

The number of guarantor was 87. This coal mine began to partly adopt the direct employment,
while labor organization after employment was completely indirect. The feature of guarantees andthe number of guarantees for a month depended on each guarantor.
On some applications, there were applicants’ thumbprints under their name. On some otherapplications, applicants put their seal on it. This difference indicates that some skilled miners had
moved among coal mines. They wanted to have their own seals as their identification.
There are five overlapping applicants’ names on a few applications. Generally the duration
between the first application and the second one was short. The guarantors of three of the five weredifferent on the first time and the second time. It is doubtful whether these persons had applied really4two times. The guarantor might make a false report about that application in order to acquire thereward of recruiting (information rent about miners’ skill) on each appearance. Even if those were
not false reports, it indicates that the firm had only roughly checked them.

2.3 Reduced complexity of the inside contract system
On these applications, there were some cases of special applicants. Two applicants seemed to form asmall miners’ group and they were leader of them. One is Torataro Hirata. He applied in February 7th,1907 with five relatives and four other people. He was 28 years old then. He guaranteed nine
applicants including his five relatives and himself. Guaranteeing himself seems interesting and we
could infer that. Guaranteeing himself meant he applied without being guaranteed by anybody.
Hence it seems that he was directly employed by Aso Co. Furthermore after the application hebecame the guarantor of three applicants who operated a winch, and they were from the same village
as his.
The other was Fukataro Iwamoto. He applied in July 3rd, 1905 with six applicants, and all ofthem were from the same village, which had a big coal mine. Except his own application, the name
Iwamoto was written on each application of other applicants. It shows that he was the leader and as
well as he himself was a skilled miner.
Some applicants guaranteed other applicants after they were hired. This indicates they were
promoted and probably within direct labor organization.
In the dual structure of naya system, these two miners were leader of the units. Aso Co. tried tosimplify the naya organization by directly hiring them, not through the head of naya. Now Aso Co.
directly enter employment contract with these leaders of units and these leaders brought and led
miners in their units.

3

The intellectual skill and the internal labor market

3.1 Change of mining method and its impact on productivity
In the coal mining, progresses for the most important modernization were mechanization at bordtransportation and at mining process and the change of mining method. Mechanization at bordtransportation was finished by 1900 at almost all coal mines in Chikuho district. About the change ofmining method, room and pillar mining method was gradually replaced with longwall mining
method in the 1900s. Efforts of mechanization of mining process began after Russo-Japanese War,and more coal mining firms started to try mechanization of mining process after WWI. And themining machines prevailed in the late of 1920s. The firm aimed to achieve greater efficiency of5mining by this development.1 The development proceeded only gradually, depending on the specificfeature of veins of each mine.
In room and pillar mining method, operations were decentralized. In other words, a coal mine
was run under inside contract between the firm and the naya. Then the head of naya delegated real
operation to several units, each of which consisted of a few miners. Each skilled miner was engaged
in mining at the face that was allotted to him and almost independent. While in longwall mining
method small faces were consolidated to long ones at which several miners worked on mining
together, mining, loading, attaching pillars and filling sand and rock after mining weresystematically divided. The introduction of longwall mining method also created a condition
favoring mechanization of mining process because extended face meant reduced marginal cost of
mechanized mining, given that fixed cost of mining machine was generally high2.
Furthermore we look at both mining method from Chikuho Tanzan Rodo Jijo (The working
situation of coal mine in the Chikuho district) (Osaka employment agency (1926)).
In room and pillar mining, at a coal seam whose roof was hard, miners horizontally mined coal along
the seam leaving some pillars of coal in order to prevent the roof from falling down. When the coalseam existed not so deep, the cost of maintenance of bords was small and it was relatively easy toadjust the amount of output as to changes of market price. On the other hand, when the coal seam
existed deep, it was difficult to maintain the bord. The pillars were always pressured by the roof andit could result in coal pillar being heated up and igniting by being squeezed down. If coal pillars
were mined (that were left deliberately for safety.), it was likely for fall of ground to occur. So it wasnecessary to deliberately adjust the number of coal pillars for ensuring security.3
Next, we look at longwall mining method. Miners placed a lot of faces (the point where peoplemine coal) at a coal seam. And after coal was mined, the faces were filled up with sands and rocks.
Using this method, large amount of coal could be mined at one time. Unlike room and pillar mining
method, it was well-ventilated inside of coal mine. They usually did not leave coal so that it lesshappened for coal to fire spontaneously, for gas to be produced, and for dust explosion to beoccurred. Above all things, it was suitable for using mining machines. In this method, however, there
were a few faults. Only skilled workers could achieve high performance. Filling up faces with sandand rock required plenty of sand and rock and a lot of time and effort. Once they started to mine, it
was not easy to intermit mining as to changes of price. When gas was spouted at a face, it got spreadaround the face.4

1

Ogino (1993), pp. 19, 262.
Sumiya (1968), p. 386.
3
Morimoto (2008), p. 10. Originally from Chikuho Tanzan Rodo Jijo (The working situation of coalmine in the Chikuho district), 1926, pp. 16-17.
4
Morimoto (2008), p. 11. Originally from Chikuho Tanzan Rodo Jijo (The working situation of coalmine in the Chikuho district), 1926, pp. 15-16.
26Document 15
At that time6 room and pillar mining method was dominant in the Chikuho district. Each coalmine had fine and also thick coal seam like coal mine as in Hokkaido these days. Hence a firm
could not make a quick decision which seam was going to be mined first, and the coal seam thatwas finest and whose roof was the robustest was mined. Workers mined coal with leaving
pillars of coal, so they did not need to put wooden poles and pay so much attention aboutcollapsing. But it had to be careful that the coal pillars were not mined. Thus they painted
pillars calcimine, which was white, to prevent coal pillars from being mined. If a miner hadcoal attached with that white, in even the slightest, the head of naya would take all of his/her
payment and he/she would be hit by the head and driven out of the coal mine. But even in thosedays, at older coal mines, they started to get coal from the pillars. When it was performed, theroof was collapsed. The number of injured person was getting larger and attaching wooden polefound a lot of trouble. And some people insisted that it would be better off mining widely
without leaving coal pillars, that is, taking longwall mining method which was adopted inforeign countries.
This referred to risk management and incentive control in room and pillar mining method.
Document 27
Although male and female workers enter the mine with their clothes on, they almost stripped
down once they started their work.

Men were naked expect of their loincloths, and women

were also naked except of their waistcloths…

It is not hard to imagine what happened

between men and women in a dark and wide bord when they dressed such as that. These
inappropriate relationships between male and female workers were also raised by the mining
method.

In pillar and bord mining method that ware then prevailed, female swampers met

male workers and sometimes had relationships with them when they carried mined coal for alittle long distance… In long wall mining method recently introduced, the moral order has been
improved by the facility under which more workers work at the same face and coal wagons areparked near the face.
This referred to the effect on monitoring by adopting longwall mining method. By adopting that
5

Morimoto (2008), p. 12. Originally from Shintaro Ishiwata, Chikuho Sekitan Kougyo Kumiai
Geppo (Monthly Report of Chikuho Coal Mining Industry Association), no.292, 1928, pp. 7-9.
6It meant 1903.
7
Morimoto (2008), p.13. Originally from Chikuho Tanzan Rodo Jijo (The working situation of coalmine in the Chikuho district), 1926, p. 76.
7

method, the number of workers at one face became larger than before, so that adultery which had
been committed in the period of room and pillar mining method never happened any more. It
indicated that monitoring by the firm had been improved. And it also implied that “underground”
culture of miners got disappeared.

3.2 Enhanced productivity with modernization

3.2.1 Result of technological change
Table 2 Technology and productivity of coal mines in the Chkuho district, comparison between 1903 and 1927.
year
1903
1927
notes
Output of coal
5,500,000
14,550,000(tons)

Mining method

Bord and piller method

Blasting operation

Gelignite (blasting gelatin)
against hard rocks.
Black powder against faces.

Output per miner at face20.0 tons per month

Output per miner (all miners

10.0 tons per month

Longwall method

Some coal mines already adopted
longwall method in 1903. In 1927,
more coal mines were on the way tointroduce mining machines.

Various blasts either imported
Jackhammers were usede in manyor made in Japan against rocks.
coal mines in 1927.
Dynamite against faces.
For some coal mines, the number ofminers, the denominator, includes
22.5 tons per monthminers who attached poles andoperators of jackhammers.
The denominator is the total numberof all miners including miners who
12.0 tons per month attached poles, operators ofjackhammers, and were engaged inother tasks.

Average wage of miner at50-55 sens per day
200 sens per day
face
Average wage of all
35-40 sens per day
150 sens per day
minersPrice of 1.8 litter of rice at
15 sens
34 sens
coal mine
Incentive wage per 1 ton
60 sens
150 sensof coal output
Source : Shintaro Ishiwatari, "Chikuho sekitan kogyo no shorai ni tsuite (On the future of the coal mining industry in the Chikuho
district)," Chikuho sekitan kogyo kumiai geppo (Monthly report of the Chikuho Coal Mining Association) , no. 292, 1928, pp.
11-13.

3.2.2 Quantitative analysis of labor input
Using Chikuho Sekitan Kougyo Kumiai Geppo (Monthly Report of Chikuho Coal Mining Industry
Association.), we analyze the relation between the quantity of labor input by department and coal
output and department.8
8

Morimoto (2008), p. 15. Originally from Chikuho Tanzan Rodo Jijo (The working situation of coalmine in the Chikuho district), 1926, pp. 29-33, 45.
8Define relevant variable as follows. Y: total amount of output in the month, X1: the number ofminers consisted of two kind of workers who mined coal and who attached poles, X2: the number ofworkers who operated elevator moved by winch, X3: the number of lightmen and carpenters, X4: thenumber of coal cleaners, X5: the number of machine operators and electric mechanics, X6: thenumber of factotums.
Y = aX1ß1X2ß2X3ß3X4ß4X5ß5X6ß6（0

ß1, ß2, ß3, ß4, ß5, ß6

1）

(1)

Some coal mines reported only the total number of two types of miners so that we cannot
differentiate these two kinds. Lightmen and carpenters were not directly related with mining but they
worked inside of coal mine, so we define the X3 is the sum of them. Both machine operators andmechanics were involved in operations and maintenance, so we define the X5 is the sum of them.
Taking logarithm natural number of the equation (1),lnY=lna＋ß1lnX1＋ß2lnX2＋ß3lnX3＋ß4lnX4＋ß5lnX5＋ß6lnX6(2)When we focus only on workers of inside of coal mines, (3)lnY=lna+B(3)

As primary analysis we exercise OLS on the equations (2) and (3) by data of Chikuho Sekitan
Kougyou Kumiai Geppou (Monthly Report of Chikuho Coal Mining Industry Association).
First separating labor input inside coal mines from others we have estimation result for 1910 to1912 and for 1914 to 1915 in Table 3.

Table 3 Output and labor inputs: Worker inside coal mines, 1910-1912, 1914-1915.
Depedent variable: Coal production.
Number of o669
665
Dgree of fre
2
0.907
R
2
0.906
adjusted R
Independent coefficientconstant
3.471

X 1: Miners

standard error

0.713

t value**

0.120

28.811

0.034

21.209

**

0.000

**

0.000

**

0.000

X 2: Elevator

0.141

0.032

4.399

X 3: Lightme

0.176

0.035

4.983

Note :**: Significant at 1 percent.

Next we have the same estimation for 1925 to 1929 in Table 4.

9p value
0.000

Table 4 Output and labor inputs: Workers inside coal mines, 1925-1929.
Depedent variable: Coal production.
Number of o855
Degree of f
851
2
0.935
R
2
0.935
adjusted R
Independent coefficientconstant
3.822
X 1: Miners
0.589
X 2: Elevator
0.292
0.134
X 3: Lightme

Note :

standard error
0.108
0.030
0.025
0.025

t value
35.547**19.501**
11.462**5.278**

p value
0.000
0.000
0.000
0.000

**

: Significant at 1 percent.

Then using all series of labor input for 1910 to 1912 and 1914 to 1915, we have estimation
result in Table 5.

Table 5 Output and labor inputs: All workers, 1910-1912, 1914-1915.
Depedent variable: Coal production.
689
Number of o
680
Degree of f
2
0.920
R
2
0.920
adjusted R
Independent coefficientconstant
3.586

X 1: Miners

standard error

0.608

t value
0.114

31.4950.034

17.946

X 2: Elevator

0.081

0.031

X 3: Lightme-0.0200.039

X 4: Coal cle
X 5: Machine
X 6: Factotum
Note :

0.102

0.023

0.190

0.022

0.057

0.021

**

: Significant at 1 percent.

Then we have the same estimation for 1925 to 1929 in Table 6.

10**

p value
0.000

**

0.000

**

2.647
-0.511

0.008

**

0.000

**

0.000

**

0.005

4.357
8.686
2.799

0.609

Table 6 Output and labor inputs: All workers, 1925-1929.
Depedent variable: Coal production.
0.961
Number of oDegree of f
0.961
2
855
R
2
848
adjusted R
Independent coefficientconstant
4.665

X 1: Miners

standard error

0.205

t value**

0.119

39.115

0.033

6.152

**

0.000

**

0.000

**

0.002

**

0.000

**

0.000

**

0.000

X 2: Elevator

0.179

0.020

8.822

X 3: Lightme

0.062

0.020

3.133

X 4: Coal cle

0.209

0.015

13.532

X 5: Machine

0.166

0.025

6.611

X 6: Factotum
Note :

0.167

0.015

p value
0.000

11.298**: Significant at 1 percent.

On Table 3, all coefficients are statistically significant. The coefficient of X1 (miners) isthe largest, which shows that input of miners had a large impact on output. On Table 4, also all
coefficients are statistically significant. The coefficient of X1 is again the largest, which showsthat input of miners had a large impact. Then comparing coefficients of Tables 3 and 4, it isseen that the coefficient of X1 on Table 4 is a little bit smaller than on Table 3 and that thecoefficient of X3 (elevator operators) is twice larger than on Table 3. These differences incoefficients of X1 and X3 seem to show that mining process was a kind of bottleneck in the
1910s.9 That is, in the 1910s, while winches were already adopted, mining machines were notyet. So the high productivity of transportation in coal mine was not fully performed because ofmining process that still depended on manual labor. However in the late 1920s, mining
machines were adopted major coal mines that enabled already mechanized transportation
system to fully perform.

3.3 Modernization and incentives for intellectual skill formation

3.3.1 Internalization of skill formation
In the period of when workers manually mined coal, the productivity strongly depended on their

9

Sumiya(1968), pp. 311-312.
11

traditional skill. That has been often referred to by the literature. As the skill was commonly useful,turnover of miners was very rapid with little thought of specific feature of each coal mine. After
introduction of mining machine such as a coal cutter, how were characteristics of skill transformed?
Document 310 “Survey of coal mines: The Third Mine of Mitsui Tagawa Coal Mine, comments byNakane, the engineering manager.”
As coal mining companies have made effort for increase of productivity these days, what mostof them are really doing is to consolidate faces, to introduce machines as possible, to cut
workforce, and thus to mechanize coal mining. The more machines are used, the more serious
effect on output of coal a breakdown of a machine could have, and hence whether members ofstaff and miners are skilled or not has become an important issue.

In particular, such as

recently when workforce is extremely cut, frequent absence of skilled workers immediately
affects output of coal.

It is critical to fill vacant positions and improve their skill, and the firm

would face a serious decrease of output otherwise.

Therefore our mine has three 60-hourcourses of training programs for security of mine, electricity, and mechanics, and has a special
training program for 90 days to foster operators of coal cutter, in which trainees practice
operation of coal cutter and rock drill and study basic electricity and mechanics.
also hire young workers who are expected to be trained as mechanics.

Our mine

It takes considerable

time to train miners to be skilled, and it takes even a few years to foster a member of staff atsome departments.

Because ordinary workers often leave to other companies, it is moredifficult to improve their skill than expected. Probably as many other companies find, even ata time such as now when unemployment rate is high, it is hard to hire workers of good quality,
which looks like a little paradox.
First of all, the skill of operating machines was very important. Absence of skilled miners hadseriously negative effects on performance. If the firm could not improve skill formation which was
newly required with modernization and recruit promising miners, it would have difficulty in its
management. Third, the firm conducted training sessions each of which was for 60 hours in a lumpabout operation safety and handling electricity and machines. It took one month and half to teach themethod of operating a coal cutter. It implied that even after introduction of machines skilled workers
were still needed. Because it was totally new kind of skill for using totally new machines, it was not
traditional one which used to be dominant and was intra-industry. And miners had to be taught thatskill in the firm. We could name it intellectual skill. Since it was new, the firm had no alternative but

10Morimoto (2008), pp. 31-32. Originally from Chikuho Sekitan Kogyo Kumiai Geppo (Monthly

Report of Chikuho Coal Mining Industry Association), no.305, 1929, pp. 61-62.
12

to train miners. The firm fostered mechanics from youth. This indicated that the firm often hired
inexperienced applicants who were expected to serve for long years and tried to invest in their
human capital. It took many months for miners to be skilled and a few years to be appointed as amember of staff. That is, the firm had to employ miners over a long period of time and offer a bonus,
we look at later, for long continued service in order to form skill and to prevent them from moving toother coal mine. Finally, even though there was excess-supply of labor, appropriate miners were hard
to be found, that is, not everyone could become a miner but only a skilled worker could.
Document 411 “Survey of coal mines: The Third Mine of Mitsui Tagawa Coal Mine, comments byNakane, the engineering manager.”
It is regretted that there often occur accidents in coal mines.

From the beginning of this year

our mine has started a program for security and has found a small decrease of minor injury, but
not of serious injury, so we think we need to improve methods of operation to systematic ones,
but we have not yet reached far in fact.

We sometime tend to think keeping security

contradicts with earning profit before we really improve security…, but actually security
contributes to profit if security is pursued in earnest.

I think the way to improve security is tohave workers pay attentions, to improve facility, and to train workers to avoid accidents
occurred by less informed or less skilled workers.

Among these three approaches, while

having workers pay attentions might seem to decrease productivity, improvement of facility andtraining of workers inevitably increase productivity. Hence if you carry out thorough thesethree, keeping security will be accompanied by boosting productivity.
Nakane stated that thorough safety control had to be carried out for increasing productivity. So
that the firm needed to call for workers’ attentiveness, introduce new machines, and keep thosemachines in good condition. Moreover he mentioned the firm should teach operation of machines tominers and make miners accumulate and enhance knowledge and skill. And he emphasized that both
introduction of machines and training miners’ skill were directly linked with not only safety control
but also increased productivity.
The “skill” mentioned by Nakane totally different from traditional skill needed before
mechanization.

Before mechanization, miners pickaxed a face, but that traditional skill of manuallabor became useless with mechanization. Different skill to operate machines equipped with the coalmine they worked on became necessary. Furthermore after introduction of longwall mining method
and mining machines, all processes of coal mining had been streamlined under the initiative.

11

Morimoto (2008), p. 33. Originally from Chikuho Sekitan Kogyo Kumiai Geppo (Monthly Reportof Chikuho Coal Mining Industry Association), no.305, 1929, pp. 61-62.
13

Operation of each machine had to fit the streamlined system. Hence the new skill was systematic
knowledge about operating machines, which can be called an “intellectual skill.” The training
program for formation of this new skill had to be instructed by engineers, not by old skilled miners,
and basically the knowledge and skill were accumulated within the firm.
Because the firm conducted training sessions and offered a bonus for long continued service, it
obviously aimed to employ miners for a long duration and to make them form skill. Conducting
training sessions exactly meant forming intellectual skill by the firm’s own expenditure. Investment
in human capital inside the firm and a bonus for continued service encouraged formation of
intellectual skill. But if some miner was poached by another coal mine after investment in his skill,
the firm would lose the cost of investment and it would not be able to get any profit from theinvestment in human capital. Therefore the firm offered houses and a bonus for continued service inorder to prevent miners from being poached.
The firm considered that workers could increase the additional amount of output comparablewith the cost of training sessions and bonus for continued service, thus it conducted the training
sessions. And in order to keep skilled miners working for its coal mine and not to waste investmentin their human capital, it offered a bonus for continued service. On the other hand, for miners, thebonus for continued service had the feature of increasing opportunity cost to leave the coal mine.
The skill was formed in this way. The skill might not be necessarily firm specific, but it was
intellectual skill formed in the firm. Before introduction of mining machines, manual skill was
intra-industry common and also was formed in naya that was outside the firm. The intellectual skill
was not that kind of skill and again, it was for operating machines and was fostered in the firm.
Since the skill needed at that period was completely new kind, investment in human capitalnecessarily had to be made in the firm. Winches and mining machines were new technology which
was introduced from the West at that time. Thus the firm needed miners with the new skill who
could operate the new machines. On the other hand, the traditional skill gradually became lessrequired. Exactly because this technology was completely new and thus its prevalence still on going,
the production system accompanied by the technology had a kind of specificity at the market in thesense that necessary skill for it was not yet priced at the market. This specialized knowledge andskill did not exist at the market, and the firm could not help but foster the skill. Because the skill
could not be priced at the market, workers did not have incentives to incur the cost of acquiring theskill and the firm had to do that. 12 As we saw in the Document 3, the new kind of skill did not exist
at the labor market and it was difficult to find appropriate worker even when unemployment rate washigh.
As for miners’ wage, the firm offered miners a little bit higher wages, either as higher basic

12

Odaka (1984), p. 278.
14

wage or additionally paid bonuses, than wage in the market. This aimed to prevent them for leaving
the firm. The firm tried to weaken their incentives to move to other coal mine. When there did notexist miners with intellectual skill, if the firm offered the same wage as the market, then miners losttheir incentives for continued service. If they left the firm, it meant waste of the cost of training
session. Furthermore the firm had to train newly hired miners, which was the additional cost it
incurred. The firm also had to stay with newly hired workers of low productivity for awhile. As longas workers earned higher wage than wage in the market which worked as incentives for continued
service, they continued to serve the same coal mine. 13 An incentive for continued service wasvarious bonuses in the Chikuho district.
Generally individual firms tried to introduce a new technology little bit faster than other firms
did, and to earn excess profits until others caught up with. Whether the firm could have miners
acquire the intellectual skill or not were the condition that determined whether the firm could get
excess profits or not. Once other firms started to introduce the new technology, the difference
between the leader and others would disappear and the leading firm had to concern about its miners
being poached by other firms. Therefore we could guess that the intellectual skill had the firm’s own
specificity. If the firm expected the possibility of poached, it offered the bonus for continued service
for long years.

3.3.2 Incentives for intellectual skill formation in the firmIntellectual skill needed after introduction of mining machines inevitably fostered inside the firm. In
order to earn returns on the investment in their human capital, the firm had to employ miners as longas possible. This understanding was commonly shared in the Chikuho Coal Mining Industry
Association. 14 But turnover of miners was traditionally very rapid. Thus it was not easy for the firm
to make miners settle down one coal mine. Tables 7 and 8 show the employee turnover at
Mitsubishi-Namazuta coal mine and Mitsui-yamano coal mine.

13

Odaka (1984), pp. 278-279.

14

Morimoto (2008), p. 35. Originally from Shintaro Ishiwata, Chikuho Sekitan Kougyo Kumiai

Geppo (Monthly Report of Chikuho Coal Mining Industry Association), no.268, 1926, p. 26.
15

Table 7 Yearly turnover of miners at Mitsubishi-Namazuta coal mine, 1915-1919.
Number of Number ofTurnover ofRate ofRate ofYear
miners at the Recruitment
the yearrecruitment
turnoverend of June of the yearabcd =b /ae =c /a
1915
2,194
3,628
3,741
165%
171%
1916
2,310
5,937
5,486
257%
237%
1917
3,194
5,561
5,226
174%
164%
1918
2,790
5,103
5,051
183%
181%
1919
3,091
4,843
4,940
157%
160%
Source : Ogino (1993), p. 150.

Table 8 Yearly turnover of miners at Mitsubishi-Yamano coal mine, 1914-1920.
Number of
Number ofminers at the
Turnover ofRate ofRate ofYear
Recruitment
end of thethe yearrecruitment
turnoverof the year
year
a
b
c
d =b /ae =c /a
1914
199
360
414
180.9
208.0
1915
155
132
176
85.2
113.5
1916
234
515
436
220.1
186.3
1917
288
549
495
190.6
171.9
1918
361
537
424
148.8
117.5
1919
382
724
605
189.5
158.4
1920
400
671
667
197.8
166.8
Source : Ogino (1993), p. 150.

From Tables 7 and 8, the employee turnover was quite rapid in the late 1910s. In 1916, forinstance, the turnover rate soared in both Mitsubishi-Namazuta coal mine and Mitsui-Yamano coalmine. Especially in Namazuta, the turnover rate was around two hundred percent in the year. The
situation gradually changed since the late 1920s.

16

Table 9 Turnover of miners in Fukuoka Prefecture.
Number of
Turnover ofRate of
Number ofYear
Recruitment
the yearrecruitment
minersof the yearabcd =b /a1925
146,457
132,457
138,41790.4
1931
83,48639,55756,772
47.4
1935
97,12589,24079,734
91.9
Source : Ogino (1993), p. 276.

Rate ofturnovere =c /a
94.5
68.0
82.1

Table 10 is the turnover of whole Fukuoka prefecture. The turnover was still high but went
down below one hundred percent. In comparison with the 1910s, we could say that the employee
turnover was declining.

Table 10 Monthly turnover of miners at coal mines in the Chikuho district, January to December,
1925.
Number of Number of Number ofTurnover ofRate ofRate ofMonthcoal mines miners at the Recruitment
the month recruitment
turnoversurveyed end of month of the monthabcd =b /ae =c /aJanuary121
206,234
12,696
12,309
6.2%
6.0%
February122
209,544
14,00812,480
6.7%
6.0%
March
122
212,803
14,76315,155
6.9%
7.1%
April
122
211,411
13,214
17,606
6.3%
8.3%
May
122
211,615
15,27915,075
7.2%
7.1%
June
123
210,644
12,396
13,511
5.9%
6.4%
July
124
210,606
13,762
14,0766.5%
6.7%
August124
209,044
11,036
12,5975.3%
6.0%
September
124
208,373
12,472
13,352
6.0%
6.4%
October
123
207,205
13,31814,4866.4%
7.0%
November
122
207,251
12,06812,0225.8%
5.8%
December
121
207,453
10,131
9,929
4.9%
4.8%
Average
123
208,349
13,17913,550
6.3%
6.5%
Total
155,143
162,598
74.5%
78.0%
Source: Chikuho sekitan kogyo kumiai geppo (Monthly report of the Chikuho Coal Mining
Association) , no. 268, 1926, pp. 25-26.
Table 9 shows the monthly employee turnover rate at the Chikuho coal mining in 1925. The
employee turnover rate declined compared with the 1910s (Tables 7 and 8). The monthly total
number of employed miners was the same as around two hundred ten thousand throughout the year.
Recruitment rate and quit rate stayed flat. It indicates that Chikuho coal mining firms had achieved
17stable management. In addition, recruitment rate and quit rate did not change either in busy farming
season or in slack farming season, by which we can infer the employee turnover was not seasonallyaffected by the agriculture sector any more. The firm did not depend on slack labor force in the
agriculture sector any longer.
Mitsui coal mining Co. particularly succeeded in stabilizing of the workforce in this direction in
the Chikuho coal mining industry. Table 11 shows that the number of workers who had served forlong years remarkably increased.
Table 11 Length of service of employees at Mitsui coal mines
percentage points
shorter thanlonger thanYear
1 to 3 years 3 to 5 years 5 to 11 years 11 to 16 years
1 year16 years
1921
20.6
32.4
18.0
17.5
6.7
4.8
Miike coal
1926
12.4
27.6
14.7
30.0
8.7
9.1
mine
1930
17.0
16.0
10.8
28.5
14.8
12.2
1935
24.9
28.0
4.3
19.9
11.1
11.8
1921
36.9
29.9
14.1
15.1
2.7
1.3
1926
20.3
26.9
18.0
23.9
7.4
3.5
Tagawa
1930
5.5
24.2
17.9
27.6
14.9
9.9
coal mine
1935
25.0
24.7
2.4
25.0
10.8
12.7
Ichihara (1997), p. 141.

Table 12 Turnover rate of miners at Mitsui-Tagawa
coal mine, 1921-1939.
Number ofRate ofRate ofYear
minersrecruitment
turnover
%%1921
10,337
91.9
135.8
1926
7,671
30.8
53.3
1930
4,878
17.6
57.7
1935
5,066
31.9
17.0
1939
10,89349.4
31.9
Source : Ogino (1993), p. 310.

Table 12 shows the employee turnover rate of Mitsui-Tagawa coal mine. While the number ofminers was over one hundred percent in 1921, it decreased in 1926 and since then it continuously
decreased. Mitsui-Tagawa coal mine succeeded in decreasing the employee turnover rate (Table 12)
and in increasing workers in continuous service (Table 11).
Furthermore Mitsui Coal Mining Co. also led over other companies in formation of intellectual
skill. While Tables 9 and 11 shows the employee turnover rate declined in whole Chikuho coalmining industry, not necessarily all coal mines could not move to the same direction with the same18

pace. Table 13 shows the distribution of length of service at Mitsui-Tagawa coal mine and
Mitsubishi-Shinnyu coal mine in 1925. 15

Table 13 Length of service of miners, surveyed at the end of November, 1925.
Shorter thanlonger than
1 to 3 years 3 to 5 years 5 to 10 years
1 year10 years
Mitsubishi2,675
1,299
383
409
201
Shinyu coal
53.9%
26.2%
7.7%
8.2%
4.0%
mine
MitsuiTagawa
coal mine

total
4,967
100%

2,501

2,729

1,104

1,799

1,021

9,154

27.3%

29.8%

12.1%

19.7%

11.2%

100%

Source : Osaka Chiho Shokugyo Shokai Jimukyoku (Osaka Administrative Office of Employment
Agency), Chikuho tanzan rodo jijo (The working situation of coal mines in the Chikuho district),
1926, pp. 86-87.

In Mitsui-Tagawa coal mine, miners who had been working for over five years were morethan tripled by comparison with Mitsubishi-Shinnyu coal mine. Mitsubishi-Shinnyu coal mine
had many miners who had been working less than a year. The proportion of miners who had
been working for over five years was very small. Where did the difference come from?
Document 516
Among coal mines I visited this time, while Mitsui Tagawa, Akaike, Dainoura take directcontrol of labor organization, Mitsubishi Shinnyu takes sewagata (indirect hiring and direct
monitoring), which means it has not yet abandoned the convention of naya and still sticks to anintermediate organization.
This shows that Mitsubishi still remained at sewagata system that strongly kept indirect labororganization. The feature of this intermediate form was yet to be broken. On the other hand, Mitsui
was ahead in transformation to the direct labor organization.
Different duration of continued service between Mitsui and Mitsubishi could be attributed to thedifference of labor organization. Direct employment of workers had a complementary effect on

15

Morimoto (2008), p. 39. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, p. 86.
16

Morimoto (2008), p. 39. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, p. 21.
19

formation of intellectual skill. By contrast, the labor organization of Mitsubishi-Shinnyu coal mine
still had a feature of naya convention and could not achieve long-term employment.
Document 617
In general workers serve for longer years at the Tagawa Coal Mine of Mitsui and the Akaike
Coal Mine of Meiji because these company offer pension or rewards for continued service.

In

particular, workers are said to be generally in continuous service at coal mines of Meiji Mining
Company.
This document shows Mitsui-Tagawa coal mine offered a bonus for long continued service. In
this way firms gave miners incentives for continued service. We could see this tendency also in two
following documents.
Document 718
The 15th clause: Awards and rewards of workers
Allowance for retirement will be added to the one stipulated by the law, and the perquisite forcontinued service will be paid to employees who have worked for 25 consecutive years, theperquisite for semi continued service will be paid to employees who have worked for 20
consecutive years, and a silver watch will be given to employees who have worked for 15
consecutive years, and a wooden drinking cup will be given to employees who have worked for
10 consecutive years.
This shows that Mitsui-Tagawa also provided award in accordance with length of service.
Document 819 “Survey on coal mines: Akaike Coal Mine of Meiji Mining Co.”
Welfare provisions, (3) Benefit programs.
a. Healthcare: Employees and their family are privileged to receive medical examination
without charge.
b. Employees are paid bonus, attendant bonus, special bonus and bonus for continued service

17

Morimoto (2008), p. 40. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, p. 85.
18

Morimoto (2008), p. 40. Originally from Chikuho Sekitan Kougyo Kumiai Geppo (Monthly

Report of Chikuho Coal Mining Industry Association), no. 305, 1929, p. 59.
19

Morimoto (2008), p. 40. Originally from Chikuho Sekitan Kougyo Kumiai Geppo (Monthly

Report of Chikuho Coal Mining Industry Association), no. 304, 1926, p. 66.
20

twice a year.
c. House and dormitory: 153 houses for administrative staff and 1,360 rooms for employees areprovided without charge.
d. Provision of articles for daily use: Shops run by the company sell them at discount prices.
Some other shops also designated.
This shows Akaike coal mine offered the bonus for continued service in 1929 and also
shows the bonus resulted in continued service as we see on Document 6. The a stipulated
Akaike offered medical examination without charge. This means Akaike coal mine reduced
risk with work in the coal mine. Benefit programs referred on a, c and d aimed to encourage
miners to have family. Job of miners was hard in the dark. Living with family generally means
higher cost of movement that could result in longer service. Dormitories without chargeenhanced this effect.
Document 920 “Survey and interview with the chief: Meiji Mining Company.”
Interview with Mr. Iwanaga, the chief.
Interviewer: How about the turnover?
Iwanaga: It’s low recently in particular. The company is proud of the low turnover of miners
who generally often move.
Interviewer: What about married miners?
Iwanga: They amount to one-third of the whole.
Interviewer: How about their attendance compared with unmarried miners?
Iwanaga: Sometime unmarried miners are better, but their attendance is not stable andsometime really bad.

In contrast, attendance of married miners is stable on average, andthey seem better at last.
Mr. Iwanaga was the chief of Meiji Mining Co. that own Akaike coal mine on Document 8.
The turnover rate of miners at Meiji Mining Co. was small in 1927. This was a result of offering thebonus for continued service and benefits programs. What is remarkable with Document 9 is thatmarried miners’ attendance was stable. Meiji Mining Co. knew that benefits programs on Document
8 could make miners serve longer, and it created a favorite environment for having their family. And
that led to continued service.
These Documents 6, 7 and 8 shows that the firm gave miners incentives for continued service.

20

Morimoto (2008), p. 41. Originally from Chikuho Sekitan Kougyo Kumiai Geppo (Monthly

Report of Chikuho Coal Mining Industry Association), no. 281, 1927, p. 81.
21

Document 1021
Bonuses include ones for diligence, perfect attendance, attendance, and output. And bonuses
to encourage them to serve longer are regularly paid bonus (summer and winter) and bonus forcontinuous service.

Bonuses nominally for diligence or continuous service were originallyintroduced for recruitment and for increase of productivity, and thus many benefits and bonuses
were taken during a boom, but we cannot see any special one except for one to withhold skilled
miners from leaving, but it rather means that current bonuses and benefits are well-designed.
This clearly states that a bonus for continued service was “to withhold skilled miners fromleaving.” The firm had to keep skilled miners even if it meant paying excess money.
Document 1122
It is beneficial in any sense to keep miners loyal to the company and to make himself and his
son consecutively serve the company.

This is the reason why each coal mine company hasi

provided incentives for continuous service, has improve welfare and benefits and has
introduced pension system mentioned above that has miners serve the company without anxiety
about the future.
It could be said to be a thorough policy for promotion of continuous service that the firm
encouraged even miners’ children to work at the coal mine, not only the firm induced miners
to have loyalty to the coal mine. When the firm expected fathers and their sons work together,fathers likely continued to serve for the firm until their sons grew up to work. If fathers andsons really began to work together, the family was expected to settle at the coal mine and toserve for long years.
Document 1223
(According to) the family survey of the Dainoura Coal Mine of Kaijima and the Tagawa Coal
Mine of Mitsui, the most of nonemployees are babies and children, and male and female adults

21

Morimoto (2008), p. 42. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, pp. 47-48.
22

Morimoto (2008), p. 42. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, p. 85.
23

Morimoto (2008), p. 42. Originally from Chikuho Tanzan Rodo Jijo (The working situation ofcoal mine in the Chikuho district), 1926, p. 57.
22

and aged people are not many…

Pupils of the primary school amounts to 3,255 out of 9,362

nonemployees at the Dainoura Coal Mine of Kaijima, and it is a little surprising that we meet somany children while walking around the coal mine.

It is because the company prefer hiring

young married couples and thus fertility rate is high.
Preference for young married couples shows the firm’s policy that had young miners
settle at the coal mine, given that families that spanned two generations more unlikely move toother coal mines.
Coal mining firms in the 1920s generally tried to motivate miners to serve longer. The
goal of such a policy was the intellectual skill formed in the firm. Firms first invested inminers’ human capital to enhance productivity, then offered benefit programs such as bonuses
for continued service to earn return from the formed skill. Hiring miners with family was alsoa part of the policy.

23

References
Chikuho Sekitan Kougyo Kumiai (Chikuho Coal Mining Industry Association), Chikuho Sekitan
Kougyo Kumiai Geppo (Monthly Report of Chikuho Coal Mining Industry Association).
Osaka Shokugyo Shokai Jimukyoku (Osaka Adiministrative Office of Employment Agency),
Chikuho Tanzan Rodo Jijo (The working situation of coal mine in the Chikuho district), 1926.
Ichihara, Hiroshi, Tanko No Rodo Shakaishi: Nihon no Dentoteki Rodo, Shakai Chitsujo To Kanri (ASocial History of Coal Mining Labor: Traditional Labor, Social Order, and Management in Japan),Tokyo: Taga Shuppan, 1997.
Ogino, Yoshihiro, Chikuho Tanko Roushi Kankeishi (History of Industrial Relations of the Coal
Mining in the Chikuho District), Fukuoka: Kyushu Daigaku Shuppan Kai, 1993.
Odaka, Kohnosuke, Rodo Shijo Bunseki: Niju kozo no Nihonteki Tenkai (Analysis on the Labor
Market: Development of the Dual Structure in Japan), Tokyo: Iwanami Shoten, 1984.
Sumiya, Mikio, Nihon Sekitan Sangyo Bunseki (Analysis on the Japanese Coal Mining Industry),
Tokyo: Iwanami Shoten, 1968.

24