JAPANESE RAILWAY HISTORY 4

Nationalisation of Railways
and Dispute overReconstruction to Standard
Mitsuhide Imashiro
Gauge
Railway Nationalisation
Policy and Establishmentof Railway Construction Act
After the opening of the first Japanese railway between Shimbashi andYokohama in 1872, the Meiji government wanted to construct and run anational railway network for itself.
However, because modern government was still young and sufferingfrom financial difficulties, it could notconstruct sufficient lines to meet thedemand in various districts. Therefore, the government approved construction of railways using private
funds. Following the opening of theJapan Railway Company, various private railways opened in quick succession.
At the end of the 1890s, the total kilometers of railway in service hadreached 2250 km, 60% of which wasshared with private railways. In July
1899, Masaru Inoue, the Director of
the Railway Agency, announced "Matters Concerning Railway Policy", insisting that railways must be controlled and constructed systematically by government and that the government should buy up the private
railways. Approving his opinion, thegovernment framed two bills: one tosell national bonds for funding thebuying of private railways and theconstruction of railways, and anotherfor buying private railways. Thesebills were introduced at the 2nd Diet
session in 1891.
However, the opposition criticised
the bills saving that private compa-42

Japan Railway & Transport Review / March 1995

■ Morioka Works Employees Celebrating Nippon Tetsudo Nationalisation

nies could construct and operate railways more cheaply and do businessbetter than government enterprise.
The bills were finally rejected.
Although the railway
nationalisation plan was rejected by
the Diet, the business world and local
governments, which were sufferingfrom the 1890 stock panic, presented
successive petitions to help private
railways by nationalising them. Public opinion was divided into advocatesof railway nationalisation, and thosefor private railways. The matter was
hotly disputed throughout Japan. In
1892, the government re-introduced
the same two bills to the 3rd Diet ses-

(Transportation Museum, Tokyo)

sion, where they were approved after
amendment, and were promulgatedas the Railway Construction Act.
There was another later (newer) Railway Construction Act, so the first act
is called the 'Old' Railway Construction Act and the 'New' Railway Construction Act to avoid confusion. The'Old' Railway Construction Act stipulated which lines would be constructed by the government, the raising of national bonds, buying of private railways, and the establishmentof the Railway Conference. The Railway Conference consisted of representatives from the army, the Ministry ofFinance, the Ministry of Agriculture
Copyright © 1995 EJRCF. All rights reserved.

and Commerce, the Ministry of Communications and the Railway Agency.
When necessary, it was to examine inwhich order to construct railways andthe amount of national bonds to raise.

Nationalisation of Railways
as National Policy afterRusso-Japanese War
Although the 'Old' Railway Construction Act exemplified the principle of constructing railways by thegovernment, when the 1890 stock
panic disappeared and the Sino-Japanese War ended, the Japanese
economy became prosperous, leading
to a sudden boom in private railways.
This was the second boom, the firstone being before the stock panic in
1890. Although the 'Old' Railway
Construction Act promulgated railway nationalisation, in reality, it wasimpossible for the government to construct all the planned lines because offinancial restrictions and the government could not help but approve construction of trunk lines by privatecompanies. The economic situation
had a strong influence on establishment of private companies and theconstruction of private railways. Advocates of privatisation dominated inboom times led by speculation fever,while advocates of nationalisation
dominated in recession.
The military authorities hadrealised the strategic importance ofrailway transport from the experienceof the Satsuma Rebellion, a civil uprising after the Meiji Restoration, andre-realised its importance in the SinoJapanese and Russo-Japanese Wars,
where railway transport was used tothe fullest extent. The military wasstrongly interested in railways; theyinsisted on reinforcing transport capacity by reconstructing railways to abroader gauge, but soon came to insist
on nationalising and unifying railways to reinforce military transport.
At first, Eiichi Shibusawa, representing the voice of the businessworld, criticised the demand fornationalisation of railways which appeared in economic depressions as away to relieve private companies.
But, as the Japanese economy shifted
towards heavy industry after theCopyright © 1995 EJRCF. All rights reserved.

Russo-Japanese War and domestic
freight transport volume expanded
rapidly, he changed his opinion andapproved nationalisation from theviewpoint of reinforcing the domestic
distribution network.
During the Russo-Japanese War,the government framed the railway
nationalisation plan with a view topost-war economic management. The
purposes of the railway
nationalisation plan were: (1) smoothdomestic transportation, (2) cheaper
freight rates and (3) re-arrangement
and integration of railway facilities.
Its effects on business were to be: (1)reduction of general administrative
costs, (2) reduction of transportation
costs, (3) reduction of facilities, (4) reduction of stores and (5) increased operational convenience. The railway
nationalisation plan also aimed toprevent foreigners holding stocks inprivate railways as well as to make itpossible to mortgage the assets of thenational railways as a whole when thegovernment wanted to raise foreignloans. The railway nationalisation
plan was recognised by the government as an important policy inrationalising the domestic distribution network with the aim of developing national wealth and reinforcing
national power.
The Railway Nationalisation Bill
was introduced to the House of Representatives in March 1906. It passed
unchanged, but was amended in theHouse of Peers and sent back to theHouse of Representatives. The
amended bill finally passed the Houseof Representatives at the end of a Diet
session that was in such an abnormal
state that deliberation was omitted
and all opposing members walked
out. Although this bill stipulated
nationalisation of 17 private railways
within 10 years, the government hadplans to buy them as soon as possible,
and all 17 were nationalised within 2years (1906 and 1907). The purchaseprice was set at a comparatively highlevel and the nobility, plutocrats,
landowners and other investors who
obtained national bonds in exchange
for the stocks of these private railway
companies found new objects of investment in heavy industry which
was showing rapid growth. The his-tory of Japanese railways clearlyshows that the wealth of the nobility,or the ruling class of the old feudal society was invested first in private
railways and then in heavy industry.
On the other hand, the comparatively
high purchase price became a financial burden on the nationalised railways for some time.

■ Shinpei Goto (1857-1929)(Transportation Museum, Tokyo)

Shinpei Goto came from Mizusawa in the Tohoku
district. He graduated from Sukagawa Medical
School, and entered the Ministry of Home Affairs.
After serving as Director of the Health Bureau of
the ministry, he participated in the quarantine of
the army during the Sino-Japanese War, and wasthen appointed Director of the Public Welfare Bureau of the Governor-General of Taiwan. In 1895,
the Ching Emperor had ceded Taiwan to Japan asa result of the Sino-Japanese War, and Taiwan
became a Japanese colony. After proving his ability to run the colony in its early years by suppressing revolts and fostering industry, Mr. Goto wasappointed first President of the South Manchuria
Railway in 1906. The company carried out national policies that played a central role in Japan'sadvance into the Chinese mainland. Mr. Goto also
showed his ability in the early years in China.
In 1908, he was appointed Minister of Communications as well as first Governor of the Standard ofRailways. At that time, the national railway was no
more than a collection of strangers because it had
been so recently nationalised. Mr. Goto advocatedphilanthropy and the principle of a "Large Family"as the basis of a spirit of unity. He also made efforts to establish decentralised management by attaching importance to field work and responsible
personnel. The principle of a "Large Family" became a psychological mainstay of JNR staff. On
one hand, Mr. Goto asserted reconstructing railways on the standard gauge and, on the otherhand, he actively participated in many projects,
such as establishment of railway training centers,
railway hospitals, the mutual aid association for
non-clerical workers, construction of Tokyo Stationand the improvement of electrification of theTokaido Line. He participated in dispatch of troops
to Siberia as Foreign Minister, as well as in the reconstruction and planning of Tokyo after the Great
Kanto Earthquake in 1923 as Minister for Home
Affairs and Governor of the Stan for Restoration ofthe Capital.

Japan Railway & Transport Review / March 1995

43

JAPANESE RAILWAY HISTORY 4

Figure 1 Railroad Network Immediately before
Nationalisation (September 1906)

Establishment of National
Railways and Standard ofRailways
With railway nationalisation, thenational railways suddenly expanded
the route kilometers from 2500 km to7150 km and the market share fromless than 50% to 90% or more, almostmonopolising the railway business inJapan. Naturally, there were counter
reactions to the railway
nationalisation plan led by railway
bureaucrats such as Masaru Inoueand the military authorities and supported by businessmen such as Eiichi
Shibusawa. Mitsubishi, which ran

44Japan Railway & Transport Review / March 1995

private coal transport railways incoal-mining regions was opposed tothe nationalisation plan. There wasan impressive scene when Takaaki
Kato, Foreign Minister and a relativeof the Iwasakis who owned
Mitsubishi, resigned to protest theplan.
Although the 'Old' Railway Construction Act stipulated that railways
would basically be owned by the government, railways related to local
traffic were allowed to remain private
when approved by the government.
This situation continued for morethan 80 years until JNR wasprivatised in 1987.

The nationalisation led to a sudden
expansion of staff because the national railways took over as many as
48,000 employees from private railways, which was more than the number of original employees (approx.
30,000). The railway authorities usedtheir monopoly to establish nationwide uniform freight rates and arationalised system for employing
and managing staff in a large and integrated organisation. In 1908, theStandard of Railways Imperial Decree was promulgated, and the railway authorities, which had been
merely an agency of the Ministry ofCommunications became an indepenCopyright © 1995 EJRCF. All rights reserved.

dent organisation, the Standard ofRailways (Tetsudo-In), under directcontrol of the prime minister. Shinpei
Goto, the first governor of the Standard of Railways, advocated the principle of a "Large Family" so that all
staff would have a spirit of unity. In1909, the Imperial Railway Account
Act was emended to separate the railway account from the general account, assuring the independence ofthe national railways.

Dispute overReconstruction of Railways
to Standard Gauge
The reason why Japanese railways
use narrow gauge (1067 mm) is notclear. But, considering that the railways constructed in New Zealand in
the same period by British engineers
are also narrow gauge, there may
have been a policy of some sort. The
opinion to change from narrow to theinternational standard gauge (1435mm) had been expressed since 1887
by the military authorities whowanted more efficient military transportation. A proposal for standard
gauge railway construction passed
the Diet, and a Gauge Investigation
Committee was established in theMinistry of Communications to investigate the matter further. However,in 1898, the military changed its
policy from standard gauge tonationalisation, and the issue was left
untouched for a while. Railway
nationalisation meant unified management and operation of railways
throughout Japan, which led naturally to unification under the narrowgauge system.
After nationalisation, Shinpei Goto
was active in proposing reconstruction of railways to the standard
gauge, and the dispute over standard
gauge blew up again. The government introduced the 1911 budget
which included funding for reconstruction to the standard gauge, but
the opposition led by Takashi Hara
opposed the bill, completely eliminating the funding for reconstruction.
The opposition Seiyukai Party asserted that investment in railways
should mainly be for extending local
lines and opposed the plan to reconCopyright © 1995 EJRCF. All rights reserved.

■ Mixed-Gauge Test Track near Tokyo

struct trunk lines to standard gauge
asserted by Mr Goto. The Seiyukai
assertion had a strong political tint
for pursuit of the opposition party'sbenefit. On the other hand, the Standard of Railways wanted to reconstruct the Tokaido and Sanyo Lines
connecting Tokyo with Shimonoseki
to standard gauge in order to increase
the transport capacity which was becoming tight. Although the TokaidoLine now plays a major role in domestic transport in Japan, in those days,
it played an even more important role
as a trunk line connecting Tokyo to
the coal mining and steel manufacturing region in northern Kyushu and on
to the Korean peninsula and Chinese
mainland by rail ferry.
Because of opposition by theSeiyukai, the government could not
make the issue of standard gauge national policy. When Shinpei Goto wasappointed Governor of the Standardof Railways for the third time in 1916,(Transportation Museum, Tokyo)

he instructed Yasuzaburo Shima, abureaucrat of the Standard of Railways, to take the lead in experimenting with various methods of reconstruction to standard gauge. He intended to show the possibility of reconstructing to standard gauge at low
cost and thus roll back the opposition.
However, in 1919, the new Seiyukai
Cabinet under Premier Hara formallyrejected the standard-gauge plan.
The 1067-mm narrow gauge remained the standard in Japan until
JNR opened the Tokaido ShinkansenLine at the international standardgauge in 1964.
■Mitsuhide Imashiro
Professor Imashiro was born in 1949 and graduated from Seikei University. After completinga doctorate in business administration at the graduate school of Seikei University, he joined
the Institute of Transport Economics. He was subsequently appointed full-time lecturer andthen assistant professor in the Department of Economics of Daito Bunka Universlty. He is also
guest professor at Stirling University in Britain. He has been a professor in the Department ofEconomics of Daito Bunka University since 1990.

Japan Railway & Transport Review / March 1995

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